Incorporating Environmental Stimuli Into The Service Profit Chain

Technological University Dublin
ARROW@TU Dublin
Doctoral Business
2012-12
Incorporating Environmental Stimuli into the Service Profit Chain

in a Retail Grocery Context: A Structural Equation Modelling
Approach.
Treasa Kearney
Technological University Dublin
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Kearney, T. (2012) Incorporating Environmental Stimuli into the Service Profit Chain in a Retail Grocery
Context: A Structural Equation Modelling Approach. Doctoral Thesis, Technological University Dublin.
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Incorporating Environmental Stimuli into the Service Profit Chain in a
Retail Grocery Context: A Structural Equation Modelling Approach
Treasa Kearney
A thesis submitted in fulfilment of the requirements for the award of Doctor of

Philosophy
College of Business
Dublin Institute of Technology
December 2012
Supervisors
Dr. Joseph Patrick Coughlan
Aileen Kennedy
Abstract
Vargo and Lusch (2006, 2008a, 2008b), suggest that a core premise of services is the
interaction between employees and customers. The role employees’ play in the service
industry is clearly acknowledged by Hesket et al. (1994), the proposers of the Service
Profit Chain (SPC). The interaction between employees and customers occurs in a
service environment: termed the ‘servicescape’ by Bitner (1992) in the marketing
literature. There is recognition in the literature that the servicescape, also known as
environmental stimuli, impacts customers and employees perceptions, emotions and
behavioural responses (Wiley, 1991, Bitner, 1992, Homburg & Stock, 2004, Kim &
Moon, 2009, Schneider et al., 2009). However, there is a paucity of research
investigating employee responses (Parish et al, 2008, Skandrani et al. 2011).
In examining employee and customer responses in a grocery retail environment, several

streams of literature are extensively reviewed to develop an integrated model. The
fundamentals of the model derive from the Stimulus Organism Response (SOR)
framework, developed by Mehrabian and Russell (1974), which is held in high esteem
in the environmental psychology literature. Furthermore, the service marketing
literature and the work climate literature have foundations stemming from the SOR. In
reviewing the literatures of environmental psychology, service marketing and work
climate, gaps are identified, resulting in the proposed model incorporating core
elements from the SPC framework (Heskett et al. 1994, Loveman, 1998), the
servicescape model (Bitner, 1992) and the work climate literature (Davis, 1984; Kuenzi
& Schminke, 2009).
As customer and employee responses are fundamental to this research, dyadic data was
collected from employees and customers in a convenience grocery store setting. A
predominantly positivistic view was taken and questionnaires were administered to
employees, customers and managers. The integrated model was rigorously tested using
a two-step approach proposed by Anderson and Gerbing (1988). Once the factors were
confirmed using Confirmatory Factor Analysis (CFA), Structural Equation Modelling
(SEM) was used to maximise reliability and validity of the model.
Several theoretical contributions are highlighted; firstly that employee environmental

stimuli construct contained five sub-factors, these were termed, E-design, E-music, E-
lighting, E-olfaction and E-layout. This highlights the complexities of the
environmental stimuli for employees. Furthermore this research found a significant
direct link between employee environmental stimuli and employee satisfaction.
Considering the literature examining the effects of environmental stimuli on employee
behaviour is astonishingly scant (Skandrani et al., 2011), this is an important
contribution to several literature streams. Secondly, examining a global configuration of
the environmental stimuli can provide a fuller framework for understanding and
exploring customer and employee behavioural responses. In particular, customer
environmental stimuli should be examined as a multidimensional construct, consisting
of five sub-factors, Design, Music, Lighting, Olfaction and Layout. In addition, as the
environmental stimuli construct is found to be separate from service quality and serves
as an antecedent to service quality; this is a significant contribution to the debate
surrounding the multidimensionality of the service quality construct.
i
Declaration
I certify that this thesis which I now submit for examination for the award of Doctor of
Philosophy, is entirely my own work and has not been taken from the work of others
save and to the extent that such work has been cited and acknowledged within the text
of my work. This thesis was prepared according to the regulations for postgraduate
study by research of the Dublin Institute of Technology and has not been submitted in
whole or in part for an award in any other Institute or University. The work reported on
in this thesis conforms to the principles and requirements of the Institute's guidelines for
ethics in research.
Signature ___________________________ Date: _____________________

Candidate
Materials Published from this work.
Kearney T, Coughlan J. and Kennedy, A. (2007), Servicescapes: A Review of

Contemporary Empirical Research’, Proceedings of the Frontiers in Services 16th
Annual Conference, October 4-7, Westin St. Francis Hotel, San Francisco, USA
Kearney T., Coughlan J. and Kennedy, A (2007), A Review of the Servicescape

literature’, Proceedings of the Irish Academy of Management (IAM) conference,
September 3-6, Queens University, Belfast.
Kearney T, Coughlan J. and Kennedy, A. (2011), Incorporating the Servicescape and

the Service Profit Chain (SPC) in a Retail Context, Proceedings of the IAM, August
31st-September 2nd, NUI, Dublin
Kearney T, Coughlan J. and Kennedy, A. (2011), Incorporating the Environmental

Stimuli and the Service Profit Chain (SPC) in a Retail Context: A Conceptual Model,
Proceedings of the Third Biennial International Conference, September 5th-8th, Turkey
Kearney T, Coughlan J. and Kennedy, A. (2013), An Exploration of the Effects of the

Servicescape on Customer and Employee Responses in a Grocery Retail Context. Irish
Journal of Management, Forthcoming
ii
Acknowledgements
It may have taken a little while to get here but I did and I owe that to the fantastic
support I have gotten along the way. Studying at DIT from Certificate right through to
PhD has been an eventful journey and I am very thankful to all the staff that helped me
along the way.
I am particularly grateful to Dr. Joseph Coughlan and Aileen Kennedy. Joe, I did my
undergraduate thesis with you and you gave me such encouragement and dedication of
your time that I would not have gotten to where I am without your help. It was a bit of a
roller-coaster of a time from undergraduate through MPhil to transferring to the PhD! I
know at times I did not think it would be possible for me to get to this point but you
always believed in me. I am so thankful for the many inspiring chats along the way!
Aileen, your feedback and advice with the PhD drove me to be more focussed and I am
delighted to have had your support along the way. Thank you both and I am looking
forward to working with you in the future.
I would like to thank those from room 4.033 that have given encouragement from the
very start: Áine, Lucy, Niamh and Marius, to those that were there towards the end of
the journey, Roisin, Etain, Anna and Lesley. To my close friends that helped me along
the way, in particular Sarah and Ealron, you gave me reassurance that it would
end…you will be delighted to know that it is now finished! Wes, there were many times
that the computer crashed, material lost or back up failed and you saved it each time,
thank you!
Not forgetting those at Keele, who made the last year of finishing the PhD achievable
and who made the first year at Keele enjoyable! Thank you.
Le chríochnú, ba mhaith liom, go háirithe buíochas a ghabháil do m’athar don tacaíocht

a thug tú dom thar na blianta. Freisin, buíochas do mo clann go léir don cabhair a thug
sibh dom.
iii
Abbreviation Table
ASA Attraction-Selection-Attrition
CFA Confirmatory Factor Analysis
CLA Customer Loyalty Attitudinal
CLB Customer Loyalty Behaviour
IM Internal Marketing
PAD Pleasure, Arousal, Dominance
PC Psychological Climate
PCg Psychological Climate-general
SEM Structural Equation Modelling
SPC Service Profit Chain
iv
Table of Contents
Abstract .............................................................................................................................. i
Declaration ........................................................................................................................ ii
Acknowledgements .......................................................................................................... iii
Abbreviation Table........................................................................................................... iv
Table of Contents .............................................................................................................. v
List of Figures ................................................................................................................. xii
List of Tables.................................................................................................................. xiii
INTRODUCTION .......................................................................................................... 15
Research Objectives ........................................................................................................ 19
Layout of the Thesis ........................................................................................................ 22
1. CHAPTER 1 The Service Profit Chain (SPC) ........................................................ 26
1.1 Introduction ...................................................................................................... 27
1.2 The SPC ............................................................................................................ 27
1.3 SPC links .......................................................................................................... 33
1.3.1 The Financial Performance and Customer/Employee Loyalty Links ....... 35
1.3.2 The Customer Loyalty and Employee Loyalty Links ............................... 36
1.3.3 The Customer Satisfaction and Employee Satisfaction Links .................. 38
1.3.4 Global Service Evaluations ....................................................................... 40
1.3.5 Service Quality .......................................................................................... 41
1.3.6 Customer Satisfaction ............................................................................... 45
1.3.7 Employee Satisfaction ............................................................................... 51
1.3.8 Employee Loyalty ..................................................................................... 54
1.3.9 Customer Loyalty ...................................................................................... 58
1.4 Conclusion ........................................................................................................ 61
v
2 CHAPTER 2 The Mehrabian and Russell Framework ........................................... 62
2.1 Introduction ...................................................................................................... 63
2.2 Environmental Psychology............................................................................... 64
2.3 The Mehrabian and Russell Framework .......................................................... 66
2.4 The S-O-R Paradigm ........................................................................................ 68
2.4.1 The (S) Component ................................................................................... 69
2.4.2 The (O) Component .................................................................................. 71
2.4.3 The (R) Component................................................................................... 77
2.5 The Role of Dominance ................................................................................... 80
2.6 A Critique of the Hypotheses ........................................................................... 83
2.7 Target-Arousal .................................................................................................. 90
2.8 Lazarus (1991) Cognition Theory of Emotion Model ...................................... 92
2.9 Conclusion ........................................................................................................ 94
3 CHAPTER 3 Servicescape ...................................................................................... 97
3.1 Introduction ...................................................................................................... 98
3.2 Bitner’s (1992) Servicescape ............................................................................ 98
3.3 Servicescape Elements ................................................................................... 107
3.3.1 Music ....................................................................................................... 108
3.3.1.1 Tempo .................................................................................................. 115

3.3.1.2 Volume and Pitch ................................................................................ 117
3.3.1.3 Music Demographics ........................................................................... 118
3.3.1.4 Music Familiarity ................................................................................ 119
3.3.2 Colour...................................................................................................... 121
3.3.3 Lighting ................................................................................................... 131
3.3.4 Olfaction .................................................................................................. 134
3.3.4.1 Olfaction Models ................................................................................. 137

3.3.4.2 Affective Responses ............................................................................ 145
3.3.5 Spatial Layout and Functionality ............................................................ 150
vi
3.3.5.1 External Layout ................................................................................... 154
3.3.5.2 Internal Layout .................................................................................... 155
3.4 An Expanded Servicescape ............................................................................ 162
3.5 Conclusion ...................................................................................................... 164
4 CHAPTER 4 Work Climate .................................................................................. 166
4.1 Introduction .................................................................................................... 167
4.2 Internal Marketing (IM) ................................................................................. 168
4.3 Work Climates ................................................................................................ 172
4.3.1 Global Verses Facet-Specific Climates ................................................... 180
4.3.2 Organisational and Psychological Climates ............................................ 182
4.3.3 Aggregate Level ...................................................................................... 185
4.3.4 Culture and Climate ................................................................................ 187
4.4 Climate Contributions .................................................................................... 193
4.4.1 Attraction-Selection-Attrition Model (ASA) .......................................... 193
4.4.2 Emotional Contagion .............................................................................. 197
4.5 Facet Specific: Employee Environmental Stimuli ......................................... 201
4.6 Conclusion ...................................................................................................... 203
5 CHAPTER 5 Methodology ................................................................................... 204
5.1 Research Methodology ................................................................................... 205
5.2 The Research Process ..................................................................................... 205
5.3 The Research Framework ............................................................................... 208
5.4 Research Aim and Objectives ........................................................................ 209
5.4.1 Research Aim .......................................................................................... 209
5.4.2 Research Objective 1............................................................................... 211
5.5 Control Variables ........................................................................................... 223
vii
5.6 Research Plan ................................................................................................. 226
5.6.1 Field Study .............................................................................................. 227
5.6.2 Dyadic Data............................................................................................. 228
5.6.3 Sample Type............................................................................................ 229
5.6.4 Sampling Method .................................................................................... 230
5.6.5 Sample Size ............................................................................................. 231
5.7 Managerial Discussions .................................................................................. 232
5.7.1 Manager and Customer Interviews ......................................................... 235
5.8 Questionnaire Development ........................................................................... 237
5.8.1 Environmental Stimuli ............................................................................ 238
5.8.2 PAD ......................................................................................................... 240
5.8.3 SPC.......................................................................................................... 242
5.8.4 Service Quality ........................................................................................ 244
5.8.5 Financial Performance ............................................................................ 245
5.8.6 Control Variables .................................................................................... 246
5.8.7 Pilot Questionnaire .................................................................................. 249
5.9 Method of Analysis ........................................................................................ 253
5.9.1 Data Cleaning .......................................................................................... 253
5.9.1.1 Missing Data ........................................................................................ 253

5.9.1.2 Data Normality .................................................................................... 254
5.9.1.3 Outliers ................................................................................................ 255
5.9.2 SEM: Stage One ...................................................................................... 256
5.9.3 SEM: Stage Two ..................................................................................... 257
5.9.3.1 Model Specification ............................................................................ 260

5.9.3.2 Model Identification ............................................................................ 260
5.9.3.3 Model Estimation ................................................................................ 262
5.9.3.4 Model Testing...................................................................................... 263
5.9.3.5 Model Modification ............................................................................. 267
viii
5.9.4 Common Method Bias ............................................................................ 268
5.10 Conclusion .................................................................................................. 268
6 CHAPTER 6 Analysis .......................................................................................... 270
6.1 Introduction .................................................................................................... 271
6.2 Data Cleaning ................................................................................................. 271
6.3 Dyadic Data .................................................................................................... 272
6.4 Descriptive Analysis ....................................................................................... 273
6.5 Common Method Bias.................................................................................... 274
6.6 Confirmatory Factor Analysis (CFA) ............................................................. 275
6.6.1 Customer Environmental Stimuli............................................................ 275
6.6.1.1 Layout .................................................................................................. 276

6.6.1.2 Design .................................................................................................. 278
6.6.1.3 Cleanliness and Olfaction .................................................................... 280
6.6.1.4 Music ................................................................................................... 281
6.6.1.5 Lighting ............................................................................................... 282
6.6.1.6 Second Order Factor Model of the Customer Environmental Stimuli 283
6.6.2 Employee Environmental Stimuli ........................................................... 287
6.6.2.1 Employee Layout (E-layout) ............................................................... 288

6.6.2.2 Employee Design (E-design) ............................................................... 289
6.6.2.3 Employee Clean and Olfaction (E-olfaction) ...................................... 291
6.6.2.4 Employee Music (E-music) ................................................................. 292
6.6.2.5 Employee Lighting (E-lighting) .......................................................... 293
6.6.2.6 Second Order Factor Model of the Employee Environmental Stimuli 294
6.6.3 PAD Customers....................................................................................... 298
6.6.4 PAD Employees ...................................................................................... 300
6.6.5 Customer Satisfaction ............................................................................. 304
6.6.6 Service Quality ........................................................................................ 305
6.6.7 Customer Loyalty .................................................................................... 307
6.6.8 Employee Satisfaction ............................................................................. 310
ix
6.6.9 Employee Loyalty ................................................................................... 311
6.6.10 Financial Performance ............................................................................ 312
6.7 Hypotheses Restatement ................................................................................. 314
6.8 Research Objectives Findings ........................................................................ 317
6.8.1 Research Objective One Findings ........................................................... 317
6.8.2 Research Objective Two Findings .......................................................... 323
6.8.3 Research Objective Three Findings ........................................................ 327
6.9 Control Variables ........................................................................................... 331
6.10 Final model ................................................................................................. 332
6.11 Conclusion .................................................................................................. 336
7 CHAPTER 7 Conclusion ...................................................................................... 337
7.1 Introduction .................................................................................................... 338
7.2 The Research Aim .......................................................................................... 338
7.3 Key Theoretical Contributions ....................................................................... 340
7.3.1 Employee Environmental Stimuli Contributions .................................... 341
7.3.2 Customer Environmental Stimuli Contributions..................................... 343
7.3.3 SPC Contributions................................................................................... 345
7.3.3.1 Customer Loyalty ................................................................................ 346

7.3.3.2 Service Quality .................................................................................... 348
7.3.3.3 Customer Environmental Stimuli-Customer Satisfaction ................... 348
7.3.3.4 Customer Environmental Stimuli- Service Quality............................. 349
7.3.3.5 Service Quality-Customer Satisfaction ............................................... 350
7.3.3.6 Customer satisfaction –Customer Attitudinal Loyalty (CLA)/Customer
Behavioural Loyalty (CLB) ............................................................................... 351
7.3.3.7 Employee Environmental Stimuli - Employee Satisfaction - Employee
Loyalty 352
7.3.3.8 Employee Satisfaction -Customer Satisfaction ................................... 354
7.4 Limitations of the Research ............................................................................ 355
7.5 Future Research Directions ............................................................................ 357
x
7.6 Managerial Implications ................................................................................. 360
References ..................................................................................................................... 364
Appendix 1 .................................................................................................................... 396
Appendix 2 .................................................................................................................... 406
Appendix 3 .................................................................................................................... 410
Appendix 4a .................................................................................................................. 412
Appendix 4b .................................................................................................................. 416
Appendix 5a .................................................................................................................. 418
Appendix 5b .................................................................................................................. 422
Appendix 5c .................................................................................................................. 426
Appendix 6 .................................................................................................................... 430
xi
List of Figures
Figure 1 Layout of Thesis ............................................................................................... 25
Figure 1.1 SPC Framework ............................................................................................. 28
Figure 1.2 SPC Framework Updated .............................................................................. 31
Figure 2.1 Mehrabian and Russell Model ....................................................................... 66
Figure 2.2 SOR framework ............................................................................................. 68
Figure 2.3 Two Dimensions of Emotion and Eight Major Emotional States ................. 75
Figure 2.4 The Inverted U Shaped Graph ....................................................................... 89
Figure 2.5 The U Shaped Graph ..................................................................................... 90
Figure 3.1 The Servicescape Model .............................................................................. 100
Figure 3.2 Musicscape Model ....................................................................................... 112
Figure 3.3 Music, Cognitive Processing, Emotional States and Approach-Avoidance
Behaviours .................................................................................................................... 113
Figure 3.4 The Influences of Ambient Scent on Consumer Responses ........................ 138
Figure 3.5 Olfaction Model ........................................................................................... 141
Figure 4.1 Evolution of the Climate Literature ............................................................. 174
Figure 5.1 Proposed Model ........................................................................................... 210
Figure 5.2 Proposed Model with Hypothesis and Controls .......................................... 225
Figure 6.1 Customers Second Order Factor Model ...................................................... 285
Figure 6.2 Customer Environmental Stimuli Construct after Aggregation .................. 286
Figure 6.3 Employee Second Order Factor Model ....................................................... 296
Figure 6.4 Employee Environmental Stimuli Construct after Aggregation .................. 297
Figure 6.5 Proposed Model ........................................................................................... 316
Figure 6.6 H5a, H5b, H9a and H9b .............................................................................. 323
Figure 6.7 Customer Environmental Stimuli-Customer Satisfaction link in Isolation . 330
Figure 6.8 Final Model .................................................................................................. 335
xii
List of Tables
Table 1.1 Changes to the SPC ......................................................................................... 30

Table 1.2 Clarification of Constructs .............................................................................. 33
Table 3.1 Perceptions of Colours .................................................................................. 128
Table 4.1 Areas of Convergence in the Culture and Climate Literature ....................... 189
Table 4.2 Areas of Difference in the Culture and Climate Literature ........................... 192
Table 4.3 The Typology of People Based upon Their Emotional Constitution ............ 199
Table 5.1 Environmental Stimuli Items ........................................................................ 239
Table 5.2 Pleasure ......................................................................................................... 240
Table 5.3 Arousal .......................................................................................................... 241
Table 5.4 Dominance .................................................................................................... 241
Table 5.5 Dominance Overlap ...................................................................................... 242
Table 5.6 Customer constructs except for Service Quality ........................................... 243
Table 5.7 Employee Constructs .................................................................................... 244
Table 5.8 Service Quality.............................................................................................. 245
Table 5.9 Deleted Items ................................................................................................ 251
Table 5.10 Options for Dealing with Missing Data ...................................................... 254
Table 6.1 Layout ........................................................................................................... 277
Table 6.2 Design ........................................................................................................... 279
Table 6.3 Olfaction........................................................................................................ 281
Table 6.4 Music............................................................................................................. 282
Table 6.5 Lighting ......................................................................................................... 283
Table 6.6 Customer Environmental Stimuli Construct ................................................. 284
Table 6.7 Employee Layout (E-layout) ......................................................................... 289
Table 6.8 Employee Design (E-design) ........................................................................ 290
Table 6.9 Employee Olfaction (E-olfaction) ................................................................. 292
Table 6.10 Employee Music (E-music) ........................................................................ 293
Table 6.11 Employee Lighting (E-lighting) .................................................................. 294
Table 6.12 Employee Environmental Stimuli Construct .............................................. 295
Table 6.13 % of Missing cases of PAD for customers ................................................. 299
Table 6.14 Dominance for Employees .......................................................................... 302
Table 6.15 Pleasure for Employees ............................................................................... 302
xiii
Table 6.16 Arousal for Employees................................................................................ 303
Table 6.17 PAD for Employees .................................................................................... 303
Table 6.18 Customer Satisfaction ................................................................................. 305
Table 6.19 Employee Quality ....................................................................................... 306
Table 6.20 Design Quality ............................................................................................ 307
Table 6.21 CLB ............................................................................................................. 309
Table 6.22 CLA............................................................................................................. 310
Table 6.23 Employee Satisfaction................................................................................. 311
Table 6.24 Employee Loyalty ....................................................................................... 312
Table 6.25 Financial Performance ................................................................................ 313
Table 6.26 List of Hypotheses and Significant Links ................................................... 315
Table 6.27 Indirect Effects ............................................................................................ 326
Table 6.28 Comparison of CFA and SEM Standardised Loadings .............................. 334
xiv
INTRODUCTION
Ni dhéanfaidh smaoineamh an treabhadh duit…

(Irish Proverb*)
*Direct translation
‘You’ll never plough a field turning it over in your mind’, meaning you have to make a start: while it is
wise to plan ahead, to think of the best way to accomplish a goal, you should not dwell too long on it!
15
In the last decade, Ireland has gone through a turbulent economic time. The ‘Celtic
tiger’ boom, from the 1990s to the early 2000s, brought about significant changes in the
Irish service sector and in particular the retail sector. This saw the growth of Tesco in
Ireland and aggressive expansion of Lidl and Aldi, the German based grocery retailers
(EIU, 2011). During this period of the Celtic tiger, the retail sector accelerated in sales,
however 2008 saw a worldwide economic crash resulting in a sharp decline in retail
sales. Irish food retail sales fell from a high of €11,393 million in 2007 to €10.370
million in 2010 (BordBia, 2011). However, the Irish food retail is set to grow by 1% a
year through to 2014, creating new opportunities for Irish retailers (BordBia, 2011).
Within Ireland, the grocery retail sector is moderately concentrated with five retailers
who account for 61% of total in sales in 2010 (EIU, 2011); the top three being
Musgraves, Tesco and BWG (EIU, 2011). These food retailers face competition from a
wide range of sources. ‘Shoppers are faced with a number of choices in terms of food
shopping alternatives, including supermarkets, convenience (local) stores, specialist
shops (butchers, bakery, etc.) and food markets’ (Doherty and Nelson, 2008, p. 349). Of
particular importance to competition is the convenience or local stores. According to the
recent BordBia (2011, p. 7) report ‘convenience in particular being the battleground
between the major retailers in the next five years’. The report notes that though the
convenience sector will grow, the share held by independents is declining.
The significance of the grocery retail stores to the future of the Irish economy should
not be viewed lightly. Many convenience grocery stores have adapted their stores to
stay ahead of competition. Checkout (2010, p. 25) noted that ‘creating the right
impression as soon as customers walk in the door is paramount’ and that elements of the
16
store such as lighting and television screens ‘all adds to the overall shopping
experience’ (Checkout, 2011, p. 23). A key component of the shopping experience
therefore is creating a suitable atmosphere for the customer. Kotler (1973) famously
used the term ‘atmosphere’ to describe the manipulation of environmental stimuli such
as music, colour, lighting and layout. He suggested that a store’s atmospheric cues (or
what is termed ‘environmental stimuli’) can be controlled to influence customer
behaviours. Doherty and Nelson (2008) concurred and recommended that in-store
design should be adopted in order to influence customers in grocery retail stores.
Given that the grocery retail industry is moderately concentrated and that there appears
to be opportunities, in particular for convenience grocery stores, convenience grocery
stores were chosen for the research. This research pays particular attention to store
shopping experience and how environmental stimuli impact on behaviours in the store.
This research attempts to explore how the stores environmental stimuli influences
customer’s behaviour but also how it influences employee’s behaviour in a grocery
retail environment.
Particular attention is given to Bitner’s (1992) servicescape model. Bitner (1992) coined
the term ‘servicescape’ to collectively describe the environmental stimuli associated
with service environments. Bitner (1992) identified three dimensions of environmental
stimuli: Ambience, Space & Function, and Signs, Symbols & Artefacts, and suggested
that they influence customer and employee behaviour. Considerable research has
examined these three dimensions as to how they influence customers but there is a
considerable lack of knowledge in understanding how these dimensions can influence
employees (Parish et al., 2008). Central to the service economy are the employees.
17
Grocery retail stores are the largest component of the Irish service economy and account
for 11% of employment (EIU, 2011). Given the nature of the service economy, it is
essential to understand the behaviours of employees in a grocery retail environment.
A Service Dominant Logic (SDL) paradigm is reshaping the way marketers view the
economy (Yan et al., 2010). SDL attempts to reframe the purpose of organisations,
suggesting a shift to viewing the economy as a service orientated marketplace, and
concentrates on co-creation of value (Brodie et al., 2011, Vargo, 2011). SDL
endeavours to show that central to the economy is ‘service’. In doing so, SDL highlights
the necessity of skilled and knowledgeable employees in co-creating value with their
customers. The current research delves into the relationship that employees and
customers have within service environment and how environmental stimuli impacts on
their emotions and behaviours.
In focusing on customers and employees, Heskett et al.’s (1994) Service Profit Chain
(SPC) provides a framework along with Bitner’s (1992) servicescape model on which to
build the research. Core to the SPC is that satisfied employees have an effect on
customers. The SPC suggests a causal chain linking employee satisfaction to financial
performance through the mediating constructs of customer satisfaction, customer
loyalty and employee loyalty (Loveman, 1998). Doherty and Nelson (2008) identified
that loyalty is a major challenge particular for grocery retailers. Lombart and Louis
(2012, p. 644) concurred and suggested that ‘faced with a highly competitive
environment, retailers are all concerned to build customers' loyalty’. Loyalty in grocery
retail context is both an employee and customer behaviour.
18
As mentioned, customers have been the focus of atmospheric research, with the
servicescape model being the primary research framework (Ezeh and Harris, 2007).
However, employees are clearly central to the service economy in Ireland and are at the
core of the SPC model. Though this is the case, limited research examines an
employee’s atmosphere. Davis (1984) indicated that an employee’s atmosphere
consisted of three dimensions: physical structure, physical stimuli and symbolic
artefacts. He specified the term physical environment to describe the atmospheric cues,
which can also be referred to as environmental stimuli, impacting employees.
Research Objectives
This research proposes a model to extend the current body of literature that surrounds
environmental stimuli. This thesis extends current understanding of environmental
stimuli by examining the servicescape model (Bitner 1992), the physical work
environment from an employee perspective (Davis, 1984; Kuenzi & Schminke, 2009)
and combining them with the Service Profit Chain (SPC) developed by Heskett et al.
(1994). The main aim of the research is to investigate the impact of environmental
stimuli on the emotional responses of both the customer and the employee, the
implications that these stimuli have on their behavioural responses and the subsequent
effect on the financial performance. In reviewing the different literatures this research
aims to contribute to each of the gaps that are identified next.
19
The first gap relates to the SPC as outlined by Heskett et al. (1994). Despite the
acceptance in the literature of many of the links within the SPC, there is a lack of
comprehensive research examining all the links in a single study (Loveman, 1998, Chi
and Gursoy, 2009). In particular there is debate over the core link of employee-customer
satisfaction, called the ‘satisfaction mirror’, in the literature. Through the use of dyadic
data, where customers are paired with the relevant employee that served them, this
research explores this core link and challenges the accepted views.
Secondly, research relating to the servicescape model has been fragmented in nature.
The majority of research has examined the environmental stimuli of the servicescape in
isolation rather than as a global configuration as proposed by Bitner (1992). Some
research has examined two factors of the servicescape, such as colour and lighting
(Babin et al., 2003, Nitse et al., 2004) or a general servicescape factor (Reimer and
Kuehn, 2005). Forthcoming research by Hooper et al. (2013) highlights the need to
extend the current body of research by examining the global configuration of the
environmental stimuli (colour, music, lighting, cleanliness, layout and design) in a
single study. This research examines the global configuration as set out by Bitner
(1992).
Thirdly, Objective one is to explore the links within the SPC. There are several links
with the SPC, specifically: employee satisfaction-employee loyalty, employee
satisfaction-customer satisfaction; employee loyalty-customer satisfaction; employee
loyalty-service quality; service quality-customer satisfaction; customer satisfaction-
customer loyalty; customer loyalty-financial performance; and employee loyalty-
financial performance. Core to the argument of the SPC is the employee satisfaction
20
customer satisfaction link, often referred to as the ‘satisfaction mirror’ (Heskett et al.,
1997). There has been mixed findings relating to the significance of the link in service
settings. This research will use dyadic data to determine the relationship. In using
dyadic data, employee responses can be matched to customer responses providing
considerable insight into their direct relationship. Structural Equation Modelling (SEM)
will be used to assess the nature of these relationships.
Objective two is to evaluate the relationship between environmental stimuli and service
quality. There has been debate in the literature regarding the relationship of
environmental stimuli and service quality. Some academics have proposed that some
elements of environmental stimuli form part of the service quality dimension
(Parasuraman et al., 1988, Brady and Cronin Jr, 2001, Pollack, 2009), whilst others
suggest that elements of the environmental stimuli are separate to service quality (Baker
et al., 1994, Reimer and Kuehn, 2005, Hooper et al., 2013).
Objective three is to assess the link between environmental stimuli and the emotional
responses of customers and employees. A previous research has assumed that emotions
can be caused by exposure to environmental stimuli (Donovan and Rossiter, 1982,
Wakefield and Blodgett, 1994, Hightower et al., 2002, Kim and Moon, 2009). This
research examined all three affective states of Pleasure, Arousal and Dominance (PAD)
that were proposed by Mehrabian and Russell (1974), while the majority of research
examining PAD has focused on the Pleasure and Arousal dimensions (Wirtz and
Bateson, 1999, Bigné et al., 2005, Mattila and Wirtz, 2006). To date, the Dominance
dimension has been largely ignored. Based on the need to understand the role emotions
21
play in understanding employee and customer satisfaction, all three affective emotional
states were examined.
Layout of the Thesis
Figure 1 shows the layout of the thesis and how each of the chapters relates to each
other and the logical flow. Each of the chapters will be signposted and how they link
will be briefly discussed. The first four chapters of the thesis are the literature chapters.
The thesis begins by reviewing the service marketing literature. Within this literature,
the SPC is presented and each of the constructs relating to the SPC (customer
satisfaction, employee satisfaction, employee loyalty, customer loyalty and service
quality) are explained in detail in order to gain a better understanding of the SPC. This
research draws from the main links within the SPC and forms a fundamental basis to the
proposed model.
The second chapter relates to environmental psychology. The Stimulus Organism
Response (SOR) model will be looked at in detail as it forms the foundation for the
Mehrabian and Russell (1974) model. This model plays an important theoretical role in
the services literature. The Lazarus (1991) model is discussed as it has been suggested
as an alternative to using the Mehrabian and Russell (1974) framework to understanding
behaviour. The role that the dominance dimension plays will be reviewed as this relates
to objective three. This chapter also forms a foundation for chapter three and four.
The third chapter relates to Bitner’s (1992) servicescape model. This chapter focuses in
on the S of the SOR. Bitner’s (1992) three dimensions of the servicescape (Ambience,
22
Layout & Function, and Sign, Symbols & Artefacts) are examined in detail. The vast
majority of research relating the servicescape focuses on the customer response and this
chapter will examine customer responses. The focus of this chapter is on an in depth
examination of the extent of the influence of environmental stimuli on customers.
The fourth chapter relates to the work climate literature. To date, the work climate
literature had examined the work environment on a global level, or at a facet specific
level. The literature is very broad and a brief background of where work climate
literatures have stemmed from is given. The key foundations of perceptions,
organisation and psychological climates will be considered. The facet specific climate
of employee environmental stimuli will be discussed at the end of this chapter. The
focus of this chapter is to highlight the absence of research on the influence of
environmental stimuli on employees.
Each of the four literature chapters relate to chapter five. This is the research
methodology chapter and where the proposed model is outlined. This chapter begins
with the research approach that is being taken and the process that this will involve. The
research framework is outlined with the aim of the research. The three objectives are
explained along with the 13 hypotheses that form the proposed model. The design and
development of the questionnaire is examined. This chapter discusses the use of dyadic
data in the research and how it was aggregated to the employee level. The chapter
finishes with a discussion of SEM and the fit statistics.
Chapter six relates to the findings of the confirmatory factor analysis and SEM. This
chapter carries out the two step approach as proposed by Anderson and Gerbing (1988).
23
The first step confirms the constructs that have been discussed in chapters one, two,
three and four. The second step involved testing the adequacy of all relationships in the
model through the use of SEM in LISREL 8.8.
Chapter seven guides the aim of the research to a close. The gaps in the literature are re-
highlighted and how the research examined these gaps is discussed. The key theoretical
contributions and implications are specified. This chapter examines the limitations of
the research and proposes direction for further research. The thesis concludes with
implications for managers.
24
Chapter One
Service Profit Chain
(SPC)
Chapter Two
The Mehrabian and
Russell Framework
Chapter Three Chapter Four

Review of the Servicescape Review of the Work Climate
Literature: Relating to the Literature: Facet Specific Climate of
Customer Environmental Stimuli. Employee Environmental Stimuli
Chapter Five
Methodology:
Questionnaire Design
and Research Objectives
Chapter Six
Findings: CFA, Second
Order Models and SEM
Chapter Seven
Conclusion, Limitations
of Research and
Figure 1 Layout of Thesis
Managerial Implications
25
1. CHAPTER 1 The Service Profit Chain (SPC)
When you’re smilin’, keep on smilin’
The whole world smiles with you.
‘When You’re Smiling’, Larry Shay, Mark Fisher and Joe Goodwin
26
1.1 Introduction
The Service Profit Chain (SPC) was first introduced by Heskett et al. (1994). Primarily
based on analysis from service organisations, the aim of the SPC was to link internal
employee satisfaction to financial outcomes. It suggests a causal chain linking employee
satisfaction through to financial performance, through the mediating constructs of
customer satisfaction, employee satisfaction, customer loyalty and employee loyalty
(Heskett et al., 1994, Loveman, 1998). The interaction between the employee and
customers is one of the core links within the SPC and relates to the concept that was
termed ‘satisfaction mirror’ (Heskett et al., 1997). The satisfaction mirror will be
examined along with the concepts of customer satisfaction, customer loyalty, service
quality, employee satisfaction and employee loyalty which are key aspects within the
SPC. Changes to the SPC will be examined first, followed by each of the links of the
SPC. Each of the constructs will then be examined in more detail.
1.2 The SPC
The SPC indicates that by ‘providing employees with a superior internal working
environment is likely to lead to satisfied employees who are both loyal to the
organization and able to provide the customer with an excellent service experience’ (Chi
and Gursoy, 2009, p. 245). See figure 1.1 for a diagram of the SPC. The yellow shaded
area illustrates the service delivery system and operating strategy part of the model.
27
Operating Strategy and Service
Delivery System
Employee
Revenue
Retention
Growth
Internal Employee External Customer Customer
Service Satisfaction Service Satisfaction Loyalty
Quality Employee Value Profitability
Productivity
 Workplace Design
 Job Design  Service Concept:  Retention
 Employee Selection and Results for  Repeat Business
Development customers  Referral
 Employee rewards and  Service designed and
Recognition
 Tools for Serving Customers delivered to meet
targeted customers’ needs
Figure 1.1 SPC Framework
Source: Heskett et al (1994, p. 166)
28
According to Heskett et al. (1994), employee satisfaction leads to employee loyalty,
both of which are believed to contribute to customer satisfaction and customer loyalty.
Though not directly depicted in this first SPC model, see figure 1.1, Heskett et al.
(1994) do refer to employee loyalty as a key link in the SPC. The SPC then progresses
through customer satisfaction to customer loyalty leading to revenue growth and
profitability (Heskett et al., 1994, Loveman, 1998). Kamakura et al. (2002) noted that
the SPC provides a much needed guide about the complex interrelationships among
employee satisfaction, customer satisfaction and the financial performance. Maxham et
al. (2008, p. 147) concurred and suggested that it is of high importance ‘to improve our
understanding of how employee perceptions and behaviors influence customer
evaluations and store performance.’ The SPC provides an integrative approach for
organisations to better understand how their employees affect customer evaluations,
customer behaviour and financial performance (Kamakura et al., 2002). Simply stated,
the SPC asserts that satisfied employees ‘produce satisfied customer and satisfied
customers tend to purchase more, increasing the revenue and profits of the organisation’
(Gelade and Young, 2005, p. 2).
Loveman (1998) refined his original model that he proposed with Heskett et al. (1994),
see figure 1.2 for diagram of the updated SPC. The major change to the model was the
exclusion of employee productivity; table 1.1 identifies the constructs that Loveman
(1998) included in the updated model. Remarkably, Loveman (1998) does not specify
why the changes were made from the original model. However, Loveman (1998, p. 25)
does suggest ‘external service quality refers to performance in the delivery of specified
customer outcomes, such as speed, accuracy of transactions, courtesy in frontline
service’, thus suggesting that productivity relates to external service quality. In
describing employee loyalty, Heskett et al. (1994, p. 167) relates it to employee
29
retention and suggest the ‘real cost of turnover is the loss of productivity’. Heskett et al.
(1997) further illustrate the importance of the employee loyalty construct and relate
productivity with output quality. This would appear similar to Loveman (1998) in
relating service quality to productivity.
Constructs (Hesket et al. 1994) Constructs (Loveman, 1998)

Internal Service Quality Internal Service Quality
Employee Satisfaction Employee Satisfaction
Employee Retention Employee Loyalty
Employee Productivity* Not identified in model
External Service Value External Service Quality
Customer Satisfaction Customer Satisfaction
Customer Loyalty Customer Loyalty
Revenue Growth Revenue Growth & Profitability
Profitability Included with Revenue Growth
Table 1.1 Changes to the SPC
* Italics identify changes made to constructs
Though Heskett et al. (1994) referred to employee loyalty, they then depicted it as
employee retention in their SPC model. Loveman (1998) depicts employee loyalty as
employee loyalty in his SPC model. Throughout the literature, employee loyalty is
considered to be a main link in the SPC (Loveman, 1998, Silvestro and Cross, 2000,
Silvestro, 2002, Homburg et al., 2009, Yee et al., 2009, Yee et al., 2011).
30
Internal Service Employee Employee External Service Customer Revenue Growth
Quality Satisfaction Loyalty Quality Satisfaction and Profitability
Figure 1.2 SPC Framework Updated

Source: Loveman (1998, p. 19)
31
In their framework, Heskett et al. (1994) refer to a term called ‘external service value’.
The external service value appears to act as a mediator between employee satisfaction
and customer satisfaction. In his research, Loveman (1998) amends his and his
colleagues’ earlier SPC model and changes the external service value to ‘external
service quality’. Within the literature on the SPC, external service quality and external
service value appear to be interchangeable (Loveman, 1998, Dean, 2004). Heskett et al.
(1994) noted that external service value is what customers receive in the service
delivery from the employee. Dean (2004) concurs and indicates that it is the positive
environment for employees emphasised in the SPC that leads to ‘value’ for the
customer. However, Brady and Roberston (2001) acknowledge that service value is
separate to service quality. ‘Specifically, value attributions are defined in part by what a
customer "gets" from a service experience’ (Brady and Cronin, 2001, p. 45). This
research focusses on the SPC and, in doing so, explores the concept of service quality
rather than service value. The final minor change to the model is that Loveman (1998)
incorporates revenue growth with profitability.
In updating the model, Loveman (1998) uses slightly different terminology than was
proposed in the original Heskett et al. (1994) SPC model. Similarly to previous research
on the SPC (Silvestro and Cross, 2000, Kamakura et al., 2002, Silvestro, 2002, Yee et
al., 2009, Yee et al., 2010, Yee et al., 2011), this updated model and terminology is used
for the basis for this research. Table 1.2 gives a clarification of each of the constructs
and the literatures they stem from. Further clarification and definition of the constructs
will be given after discussing the links in the updated SPC model.
32
Constructs Clarification Literature
(Loveman, 1998)
Internal Service How the internal work environment influences Organisational
Quality employees attitudes and behaviours; can relate Psychology
to work place design, job design, employee
selection, (Heskett et al., 1994, Schulte et al.,
2006)
Employee Pleasurable emotional response resulting from Organisational
Satisfaction appraisal of one’s job (Locke, 1976) Behaviour
Employee The proportion of employees who stay Organisational
Loyalty committed to the organisation (Oliver, 1981) Psychology
External Service Delivery of superior service relative to Marketing
Quality customers’ expectations (Gazzoli et al., 2010)
Customer Pleasurable emotional response resulting from Marketing
Satisfaction organisations meeting or surpassing customer
expectations (Westbrook and Oliver, 1991)
Customer Loyalty Commitment to rebuy, repurchase or refer a Marketing
friend to the organisation (Chi and Gursoy,
2009)
Revenue Growth Relates to the financial performance of the Across
& Profitability organisation (Schneider et al., 2009) literatures
Table 1.2 Clarification of Constructs
1.3 SPC links
Past research in the SPC literature has given considerable insight into the different links
of the SPC model (Rucci et al., 1998, Anderson and Mittal, 2000, Silvestro and Cross,
2000, Kamakura et al., 2002, Gelade and Young, 2005, Pritchard and Silvestro, 2005,
Gummesson, 2007, Lariviére, 2008, Homburg et al., 2009, Yee et al., 2009, Yee et al.,
2010, Yee et al., 2011). A significant amount of research that has been carried out on
the links is in the financial services sector (Kamakura et al., 2002). Loveman (1998)
suggested that collecting data from banks is a good source of analysis as employee,
customers and revenue are all accounted for at the same place.
33
Within the SPC literature, past empirical research has mainly focussed on isolated links
in the SPC. Although widely used by practitioners, i.e. South West Airlines, Sears, the
SPC’s series of hypothesised relationships have ‘not been rigorously tested using data
that span all components of the model’ (Loveman, 1998, p. 18). According to Maxham
et al. (2008, p. 147), ‘this narrow focus has also limited a more comprehensive test of
the value chain’. Chi and Gursey (2009, p. 245) concurred and noted that ‘even though
both customer satisfaction and employee satisfaction and their retention have been
studied extensively, impacts of employee satisfaction and customer satisfaction on
financial performance measures have not received much attention’.
The entire chain has had limited research in any one study (Loveman, 1998, Chi and
Gursoy, 2009). Brown and Lam (2008) agreed and suggested that the financial
significance of these interactions may not be fully appreciated yet. However, Yee et al.
(2009, 2010, 2011) have been attempting to address this gap within a Chinese context
and have also examined several service settings, such as hotels, catering and fashion
retailing. Loveman (1998) notes that the evidence underlying the SPC has remained
limited to case studies or to components of the SPC such as the link between employee
satisfaction and customer satisfaction. The employee satisfaction and customer
satisfaction link is the most widely researched and empirically tested of the links in the
SPC (Dean, 2004). By examining the SPC in its totality, the links between employee
satisfaction, customer satisfaction, customer loyalty, employee loyalty and the financial
performance can be researched. The SPC proposes that each construct will ultimately
impact financial performance in some form. As such, explaining the framework from
the financial performance construct back to internal service quality will provide a more
comprehensive overview of the entire SPC.
34
1.3.1 The Financial Performance and Customer/Employee Loyalty Links
The last link in Loveman (1998) SPC, as depicted in figure 1.2, is the financial
performance link. This link suggests that customer loyalty will lead to higher financial
performance, such as profits. Anderson and Mittal (2000, p. 116) pointed out that
‘customers may only become profitable to serve over time.’ When customers become
repeat customers of an organisation, they reduce future transaction costs, customer
acquisition costs and are more likely to adopt a company’s offering (Homburg et al.,
2009). Loveman (1998, p. 18) concurred and noted that customer loyalty will have a
positive affect on financial performance due to customer loyalty resulting in ‘low
attrition rates, the purchase of more than one product or service, and positive word of
mouth’. Customer loyalty is likely to increase a company’s profitability because
retaining an existing customer costs much less than attracting a new one (Chi and
Gursoy, 2009). It creates increased profit through enhanced revenues, reduced costs to
acquire customers, lower customer-price sensitivity, and decreased costs to serve
customers familiar with a firm’s service delivery system (Reichheld and Sasser Jr, 1990,
Bowen and Chen, 2001).
Schneider et al. (1998, p. 150) agreed and suggested that ‘it is less expensive for an
organisation to keep a current customer than to gain a new one’. By losing a customer, a
‘firm loses sales but also the benefits of retained customers such as lower service and
marketing costs’ (Anderson and Mittal, 2000, p. 117). Anderson et al. (2004) concurred
and noted that acquisition costs and transaction costs decline when customers are loyal
and that revenues will increase thus enhancing the net profit. Anderson and Mittal
(2000, p. 117) suggested that ‘the loyal customer has to be replaced and (at a higher
acquisition premium) by a new customer who buys less frequently and in smaller
35
quantities (lower revenue), requires more service (higher service cost), and is less likely
to recruit new customers (higher marketing costs)’.
According to Chi and Gursoy (2009, p. 246), the same holds true for employees,
employees that are loyal will ‘likely to result in lower turnover and therefore a better
financial performance due to decreasing costs of attracting and training new
employees’. Both Green and Tsitsianis (2005) and Hsu and Wang (2008) suggest that in
order for organisations to compete competitively, they need to be able to retain their
employees and reduce employee turnover. Reducing employee turnover drives down the
financial costs through reduced training expenditure and helps build relationships with
the customer and other employees by maintaining employee loyalty (DiPietro and
Milman, 2004, Gentry et al., 2006, Hsu and Wang, 2008). The financial cost of
replacing an employee is significant (Eskildsen and Nussler, 2000). The time and effort
needed to find another employee and train them can cost between one and half to three
times the individuals annual salary (Earle, 2003, Whitt, 2006). However, Chi and
Gursoy (2009) found that employee loyalty has no direct impact on financial
performance but that the relationship is mediated by customer satisfaction. According to
Loveman’s (1998) model, customer loyalty drives profits; customer satisfaction drives
customer loyalty but employee loyalty drives customer satisfaction through creating
value for the customer.
1.3.2 The Customer Loyalty and Employee Loyalty Links
It can be seen that both customer loyalty and employee loyalty are therefore important
factors in determining profits. Rust et al. (1996, p. 64) indicated that ‘employees are
similar to customers; their satisfaction and retention are instrumental’. Dean (2004)
36
noted that future research looking at the link between employee loyalty and customer
loyalty could provide fruitful research. According to Rust et al. (1996) and Kumar and
Shekhar (2012), employee loyalty is an important aspect in determining customer
loyalty. Employees who stay in an organisation can develop personal relationships with
customers. These relationships are the foundation for a reinforcing cycle of positive
interactions between employees and customers (Schlesinger and Heskett, 1991, Allen
and Grisaffe, 2001). Foster (2008) concurred and noted that loyal employees can
improve relationships between customers and employees.
Rust et al. (1996, p. 63) suggest that ‘employees who perceive relationships with
customers provide better service. Customers who receive better service express fewer
complaints and thereby create fewer problems for employees.’ The relationship between
the employee and the customer is more favourable and this favourable relationship
results in better service which in turn leads to higher customer satisfaction (Rust et al.,
1996). Loveman (1998, p. 18) concurred and suggested that ‘satisfied customers are
more likely to be loyal customers’. Furthermore customers that are satisfied are likely to
become loyal and retained customers are a revenue-producing asset for the firm (Tepeci,
1999, Anderson and Mittal, 2000, Concalves and Sampaio, 2012).
Similarly research has shown that employee satisfaction is one of the best predictors of
employee loyalty (Hsu and Wang, 2008). Nguyen (2006) found that employee
satisfaction is crucial and that it is linked to the level of commitment to the organisation.
Chi and Gursoy (2009, p. 246) concurred and suggested that ‘employees who are happy
and satisfied with their work environment are more likely to stay with the company’.
Rust et al. (1996, p. 63) pointed out that the literature proposes that ‘improving
employee satisfaction thus appears to be instrumental for decreasing employee
37
turnover’. In their research Heskett et al. (1994) focus on putting the employee first, as
if employees are satisfied then the customer will be satisfied. Schneider et al. (2005, p.
1018) agreed and suggested that ‘the way people behave towards customers is related to
customer satisfaction and subsequently to unit sales’.
1.3.3 The Customer Satisfaction and Employee Satisfaction Links
Early on Heskett (1986) identified a central point, in that service value and external
service quality are defined by the customer. It is the customer’s perceptions that
measure and define external service quality (Loveman, 1998). In his research Loveman
(1998) did not measure service quality but suggested that customer satisfaction is
related to employee satisfaction and loyalty.
Heskett et al. (1997) proposed that customer’s satisfaction is a response to employee
satisfaction and focused on what they described as the ‘satisfaction mirror’ which
indicates a direct link. The satisfaction mirror suggests that if employees are satisfied,
this will be reflected in terms of customer satisfaction (Heskett et al., 1997). Dean
(2004, p. 339) noted that though ‘the conceptual basis for the satisfaction mirror does
not appear to have been explored’, it has been generally accepted in the literature that
customer satisfaction and employee satisfaction are positively correlated (Wangenheim
et al., 2007, Brown and Lam, 2008, Jeon and Choi, 2012). Bitner (1990) suggests that
employees are performers in a service setting and their satisfaction can create a better
service experience for the customer. Chi and Gursoy (2009, p. 246) further noted that
‘satisfied employees are likely to provide a better service which results in a satisfactory
service experience for their customers’, thus leading to customer satisfaction. The
38
influence of employee satisfaction on customer satisfaction has received considerable
attention within the marketing literature (Jeon and Choi, 2012).
Rust and Zohorik (1993) found that customer satisfaction can be linked to customer
loyalty and that customer loyalty results in higher profits and market share. Chi and
Gursoy (2009) reported that customer satisfaction has a significant impact on financial
performance. Wiley (1991) indicated that, from a financial perspective, achieving
customer satisfaction has been viewed as a logical means for increasing revenues and
profit and according to Heskett et al. (1994) in order to affect a customer’s satisfaction
you must start with employees satisfaction and their loyalty. Loveman (1998) suggest
that ‘internal service quality’ drives employee satisfaction. Dean (2004) identifies that
internal service quality can be viewed as the impact of the work place environment or
work practices on employees.
This first link, internal service quality affecting employee satisfaction, appears to be
consistent with the literature from organisational psychology and specifically the work
climate literature, which will be reviewed in detail in chapter 4. Schulte et al. (2006)
noted that the work climate literature relates to the internal work environment and how
this environment influences employees attitudes and behaviours. Empirical evidence to
support a link between employees experience with their work environment, their
responses and customers evaluations of the service has been found (Schneider et al.,
1980, Schneider and Bowen, 1985, Schneider, 1990, Schneider et al., 1998, Schneider
et al., 2000). It is not unexpected to find that the work environment affects employees
because employees spend more time in the service environment then customers (Parish
et al., 2008). According to Earle (2003) it is where they spend the majority of their
lives. From a financial perspective alone it is important to understand the affects that the
39
physical work climate may have on employee behaviour. The work climate literature,
chapter four, will examine the influence of the internal service quality, specifically the
physical work environment, on employee behaviour in more detail.
As can be seen, the SPC examines several concepts relating to services marketing,
customer satisfaction, customer loyalty, service quality, employee satisfaction and
employee loyalty. The emotional responses that appear often in the marketing literature
are customer satisfaction (Oliver, 1980, Yi, 1989, Anselmsson, 2006, Ding et al., 2010,
Wu, 2011) and customer loyalty (Pritchard et al., 1999, Bowen and Chen, 2001, Ezeh
and Harris, 2007, Hsu and Wang, 2008). These two concepts are often researched with
the emotional responses of employees; employee satisfaction (Locke, 1976, Scott et al.,
2006, Chi and Gursoy, 2009, Jeon and Choi, 2012) and employee loyalty (Cotton and
Tuttle, 1986, Rust et al., 1996, Whitt, 2006) which are taken from the organisational
behaviour literature. Employee loyalty and employee satisfaction are considered to be of
central importance in the Internal Marketing (IM) literature. IM views employees as
internal customers and similarly to external customers, internal customer satisfaction is
important. IM will be looked at in more detail within chapter four on work climates.
The concepts of customer satisfaction, employee satisfaction, employee loyalty,
customer loyalty and service quality will all be looked at individually. Customer
satisfaction and service quality can be difficult to separate and as such Brady and
Robertson (2001) referred to them as global service evaluations.
1.3.4 Global Service Evaluations
40
The interaction between a service provider and a customer and the role this service
exchange plays in influencing customer responses has been widely reflected upon in the
services literature (Vargo and Lusch, 2008b, Jayawardhena and Farrell, 2011, Po-
Young et al., 2012). During the consumption experience customers interact with their
service setting and with the service provider therefore it is important to research
customer’s evaluations of this service exchange. Pollack (2009, p. 43) noted that ‘due to
their intangible nature services are more difficult to evaluate than products’. Value then
cannot be embedded into the manufacturing process but is rather co-created and
evaluated by the consumer (Vargo, 2011). The literature on customer’s evaluations to
the service exchange has resulted in two main streams of research; service quality and
satisfaction (Oliver, 1981, Parasuraman et al., 1988, Namasivayam and Mattilla, 2007).
Research suggests that service quality and satisfaction can be viewed as two distinct
concepts and that satisfaction is generally considered to be preceded by service quality
(Cronin Jr and Taylor, 1992, Liljander and Strandvik, 1997, Minjoon and Shaohan,
2010, Po-Young et al., 2012). As a result, service quality will be looked at first followed
by customer satisfaction.
1.3.5 Service Quality
According to Pollack (2009, p. 42) ‘over the past decade researchers have devoted
considerable attention to studying service quality as perceived by the consumer’.
Research has acknowledged that service quality is widely regarded as being elusive and
difficult to define (Parasuraman et al., 1985, Cronin Jr and Taylor, 1992). Due to the
difficulty in defining service quality there has existed a problem in conceptually
differentiating between it and customer satisfaction (Ekinci, 2001). Chandon et al.
41
(1996, p. 66) suggest that ‘service quality depends on consumers’ satisfaction with their
encounters with the company’s employees, but it also depends on the quality of the
service obtained and on the physical surroundings of the service’.
Similarly to the satisfaction literature the service quality literature has been
conceptualised as involving a comparison of expectations with performance
(Parasuraman et al., 1985, Liljander and Strandvik, 1997). It is considered the delivery
of superior or excellent service relative to customer’s expectations (Pollack, 2009). This
conceptualisation forms the basis of much of the service quality literature and is called
the disconfirmation paradigm (Brady and Cronin Jr, 2001).
This paradigm suggests that quality results from a comparison of perceived with
expected performance. Parasuraman et al. (1988) suggest that the perceived service
quality is considered to be a global judgement or attitude that is related to the
superiority of the service. It has been described as a form of attitude that is related to
satisfaction but that is not the same as satisfaction (Parasuraman et al., 1988).
According to Liljander and Strandvik (1997, p.150) a ‘customers evaluations of service
quality can be described as a cognitive process, where customers consider the
goodness/badness of different components of the service...by comparing the service
performance with some predetermined standard’. Kim and Moon (2009, p. 145) agreed
and noted that it can be ‘viewed as representing a cognitive view of customer decision
making process.
According to Cronin Jr. and Taylor (1992, p. 55-56) ‘the difference between consumers’
expectations about the performance of a general class of service providers and their
assessment of the actual performance of a specific firm within that class drives the
42
perception of service quality’. Parasuraman et al. (1988) agreed and suggested that the
difference between the satisfaction and service quality concepts lies in the way that
disconfirmation is operationalized. In measuring perceived service quality the level of
comparison is what a customer should expect (i.e from their expectations), whereas in
the measures of satisfaction the appropriate comparison is what a customer would
expect (Cronin Jr and Taylor, 1992). Parasuraman et al. (1988, p. 17) noted that within
‘the service quality literature expectations are viewed as desires or wants of the
customer, i.e., what they feel a service provider should [original emphasis] offer rather
than would offer’.However after considerable debate within the service quality literature
Parish et al. (1991) proposed changes. This change ‘focused on the expectations element
where repsondents were now required to indicate what an excellent service would
provide rather than what firms in the industry should provide’ (Smith, 1995, pg. 259).
From a theoretical perspective there are two dominant schools of thought, the European
and the US. Both of these schools agree that consumers arrive at an evaluation of
service quality that is based upon the disconfirmation paradigm (Ekinci, 2001) and that
employees play an important role in service quality (Parasuraman et al. 1991, Chandon
et al. 1996, Pollack, 2009, Ueno, 2010). The schools also accept that service quality is a
multidimensional construct. However, there appears to be a lack of consensus in the
literature regarding the number and nature of the dimensions (Smith, 2000).
‘Considerable debate exists regarding the number and type of dimensions’(Pollack,
2009, p. 43). The European school of thought maintains that consumers judge the
quality of service on technical quality and functional quality (Chenet et al, 1999,
Pollack, 2009). Chenet et al. (1999) highlight that functional quality dimension has been
seen as the more important aspect and relates to psychological interaction that takes
place during the transaction.Whereas the US school of thought identifies five service
43
quality dimensions; reliability, responsiveness, assurance, empathy and tangibles based
on Parasuraman et al. (1988) research. This conceptualisation of the service quality is
measured with the SERVQUAL scale and although it has been largely criticised it is the
most popular measure of the service quality construct (Smith, 1995). On the other side,
the European measure has been criticised by its lack of a tangible dimension. Pollack
(2009, p. 44) noted that it does not include the ‘quality of the physical service
environment that corresponds to the tangible dimension of SERVQUAL’. Early on
Shostack (1977, p. 77) indicated that perceptions of service quality ‘appear to be shaped
to a large extent by the things that customer can comprehend with his five senses-
tangible things. But a service itself cannot be tangible so reliance must be placed on
peripheral cues’. According to Kotler (1973, p. 50) the five senses form the basis for
describing a service atmosphere and ‘atmosphere is always present as a quality of the
surrounding space’. Bitner (1992) concurred and indicated that the surrounding service
environment can have a significant influence on perceptions of the overall quality of the
service encounter.
In an effort to bring the two schools of thought together Brady and Cronin (2001)
proposed the hierarchical service quality model (HSQM). Their model was based on
Gronroos (1984) and Rust and Oliver’s (1994) theoretical formulations as well as
evidence that the service environment affects service quality perceptions (Bitner, 1992,
Spangenberg et al., 1996). Within this model quality is viewed as a multilevel construct
consisting of three primary dimensions, interaction quality, physical environment
quality and outcome quality (Brady and Cronin Jr, 2001). Empirical support was found
for the model and provided support for the previous theoretical models.
44
However, Brady and Cronin (2001) incorporated elements from Bitner’s (1992)
servicescape dimensions and suggested they formed part of the service quality
construct. Reimer and Kuehn (2005) separated the servicescape elements from service
quality and suggested that servicescape dimensions impacted directly on perceptions of
service quality. This suggests that servicescape elements are an antecedent to service
quality rather than part of the construct. There appears to be a gap in the literature
examining the servicescape dimensions as separate to service quality. However, a
forthcoming article by Hooper et al. (2013) argues that servicescape dimensions precede
service quality and further research is needed. The importance of the servicescape as its
own construct with three dimensions is stressed by Bitner (1990, 1992) and will be
discussed in detail in chapter three.
Overall the focus of service quality research has been the investigation of how it
differentiates itself from satisfaction (Brady and Cronin Jr, 2001, Brady and Robertson,
2001, Rust and Oliver, 1994, Pollack, 2009). An effort to understand the relationship
that exists between service quality and satisfaction has been sought within the service
literature. Though both are global service evaluations there are apparent distinctions in
their cognitive and affective attributes (Oliver, 1997, Brady and Robertson, 2001).
Customer satisfaction will be looked at next to understand the distinction between the
two.
1.3.6 Customer Satisfaction
Central to the marketing literature and marketing practice is customer satisfaction
(Churchill Jr. and Surprenant, 1982, Yi, 1989, Oliver, 1999, Vilares and Coelho, 2001,
45
Yeung and Ennew, 2001, Anselmsson, 2006). A significant volume of literature
emerged in the early 1970s with Oliver (1977, 1980) producing review articles. Since
then, there has been considerable research in the area (Yi, 1989, Anselmsson, 2006,
Burns and Neisner, 2006, Hume and Mort, 2010, Miles et al., 2012). According to
Churchill Jr. and Surprenant (1982, p. 491), customer satisfaction is a major concept
which links ‘processes culminating in purchase and consumption with post purchase
phenomena such as attitude change, repeat purchase and loyalty’. Along with customer
loyalty, customer satisfaction has been researched with employee satisfaction, financial
performance and as noted has closely been tied in with service quality.
Bitner (1990) suggested the difference between service quality and customer
satisfaction is that perceived service quality is a form of attitude, an overall evaluation,
whereas satisfaction is a transaction-specific measure. However, Anderson et al. (1994)
suggested that at least two conceptualisations can be distinguished for satisfaction;
transaction specific and cumulative. The transaction specific perspective suggests that
customer satisfaction is viewed as a post choice evaluative judgment of a specific
purchase occasion (Vilares and Coelho, 2001), whereas the cumulative
conceptualisation is suggested to be an overall evaluation based on total purchase and
consumption over time (Fornell, 1992). On the other hand, Oliver (1981, p. 27)
suggested that overtime ‘satisfaction soon decays into (but nevertheless greatly affects)
one’s overall attitude towards purchasing products.’
From the literature a clear distinction is that satisfaction contains an affective or
emotional dimension as well as a cognitive dimension (Liljander and Strandvik, 1997).
Giese and Cote (2000) indicate that the general consensus appears to be that customer
satisfaction is comprised of three basic components: a response (cognitive and/or
46
emotional) pertaining to a particular focus (consumption experience) determined at a
particular time (post purchase).
Within the satisfaction literature, the confirmation/disconfirmation of expectations
model (DS model) where customer satisfaction is hypothesised to result from a process
of a cognitive comparison is traditionally seen as the predominant concept (Phillips and
Baumgartner, 2002, Burns and Neisner, 2006). This takes a purely cognitive approach
and does not take into account affective responses (Liljander and Strandvik, 1997).
Churchill Jr. and Surprenant (1982, p. 493) noted that ‘satisfaction is an outcome of
purchase and use resulting from the buyers comparison of the rewards and costs of the
purchase in relation to the anticipated consequences’. It is considered to be an overall
judgment process of the perceived discrepancy between prior expectations and actual
consumption (Han and Ryu, 2009). When faced with an exchange encounter, for
example a visit to a retail store, customers approach with certain expectations (Burns
and Neisner, 2006). Yi (1989, p. 69) highlighted that ‘according to the
confirmation/disconfirmation framework, consumers compare their perceptions of
product performance with a set of standards (e.g., expectations or some other norm of
performance)’. Confirmation happens if the perceived performance matches the
standards that were expected. Disconfirmation is the therefore when performance does
not match the standards that were expected.
If perceived performance is greater than expected, positive confirmation (satisfaction)
occurs and if perceived performance is lower than expectations, negative
disconfirmation (dissatisfaction) occurs (Matzler et al., 2004). ‘If the product performs
as expected, the outcome is moderate satisfaction or indifference’ (Matzler et al., 2004,
p. 1182). Both confirmation and disconfirmation are expected to determine if the
47
customer is satisfied or dissatisfied (Oliver, 1980, Yi, 1989). Westbrook and Oliver
(1991) noted that in this regard satisfaction is seen as a one-dimensional concept,
though early on some authors suggested it was dual dimensional (Maddox, 1981).
Overall, the DS model assumes that satisfaction is formed through a cognitive
comparison of the perceived performance and the pre-purchase expectations (Oliver,
1980, Matzler et al., 2004).
However, it has also been noted in the literature that the above process may be more
complicated and that affect may play an important role in explaining customer
satisfaction (Phillips and Baumgartner, 2002). As noted, it is the affective dimension
that differentiates satisfaction from service quality. According to Westbrook (1987, p.
259), ‘the affective concept is generally understood to comprise a class of mental
phenomena uniquely characterised by a consciously experienced, a subjective feeling
state, commonly accompanying emotions and moods.’ The term ‘affect’ has been
conceived in the literature as an umbrella term that includes emotions and moods
(Bagozzi et al., 1999). Bagozzi et al. (1999, p. 184) indicated that ‘the line between an
emotion and mood is frequently difficult to draw but often by convention involves
conceiving of a mood as being longer lasting (from a few hours up to days) and lower in
intensity than an emotion’. Emotion is a more specific term used to define a mental state
of readiness, is more intense than a mood and arise in response to an evaluative
judgment and interpretation thereof (Westbrook and Oliver, 1991, Bagozzi et al., 1999).
Mehrabian and Russell (1974) suggested three primary emotional responses: Pleasure,
Arousal and Dominance (PAD). These are affected by the environmental stimuli, the S-
O part of the Stimulus-Organism-Response (SOR) model. This will be looked at in
more detail in chapter two. Within the satisfaction literature, most empirical studies that
48
have looked at the affective concept have used Izards differential Scale (DES II), which
is a shorter version of Izards DES I scale (Westbrook, 1987, Johnson et al., 1995). It
consists of ten emotions: joy, anger, disgust, contempt, shame, guilt, sadness, fear and
surprise (Johnson et al., 1995). These emotions coincide with Mehrabian and Russell’s
(1974) primary emotions of PAD.
Burns and Neisner (2006, p. 50) pointed out that ‘since the experiences provided by
retailers are inherently service-centric, it is logical to expect that affective evaluations
also play an important role in the level of satisfaction experienced by consumers’.
However, although emotions are considered to play an important role in other aspects of
consumer behaviour, the majority of research in customer satisfaction has been
cognitive (Bagozzi et al., 1999). Mattila and Wirtz (2006, p 229) concurred and noted
that ‘previous satisfaction research has mainly focussed on cognitive expectations in
explaining consumers’ responses to service experiences’ and that the affective concept
has been mainly left unexplored within the satisfaction literature. Early on, Bagozzi et
al. (1999) suggested that emotions play a significant role in consumers choice and
Oliver (1993) demonstrated the effect of emotions on satisfaction. In his research,
Oliver (1993) suggested affect as a mediator between cognitive evaluations, such as the
disconfirmation of a comparison standard or the perceived product performance and
satisfaction. Oliver (1993) also proposed a model where disconfirmation of
expectations, attribute performance and affect may contribute to satisfaction but where
affect could also act as a mediator.
According to Liljander and Stradvik (1997) affect can also be viewed as an independent
variable and along with the cognitive variable can provide more of an explanation of
satisfaction then either construct would by itself . Liljander and Strandvik (1997)
49
indicated that satisfaction cannot be fully understood without acknowledging this
affective dimension. Pham et al. (2001) concurred and noted that consumers evaluations
have been shown to be based on their affective responses to the physical environment.
Ding et al. (2010, p. 97) acknowledged that though ‘most studies agree that satisfaction
represents an overall psychological state’ the role and importance of affect within the
satisfaction literature needs to be further examined (Burns and Neisner, 2006). These
two evaluative processes, cognitive and affective, are considered to produce separate
influences on the level of satisfaction experienced (Oliver, 1993, Burns and Neisner,
2006). Liljander and Stradvik (1997) noted that the cognitive comparison process
requires deliberate processing of information, in that a customer has a set of
expectations and compares them with the perceived performance.
The affective processes are thought to be outside the conscious control of the customer
(Burns and Neisner, 2006). Customers are unaware that they are processing the
information that they are receiving and it is this affective state that is important to
research within the satisfaction literature. Satisfaction, along with customer loyalty, is
considered to be an emotional response (Bagozzi et al., 1999, Back, 2005). Before
looking at customer loyalty, employee satisfaction will be looked at. Bitner (1992) and
Mehrabian and Russell (1974) both strongly suggest that that the service environment
can produce an emotional response among customers and employees. Furthermore,
similarly to customer satisfaction employee satisfaction is acknowledged to be based on
cognitive and affective response (Wirtz and Bateson, 1999, Mattila and Wirtz, 2006).
50
1.3.7 Employee Satisfaction
Employee satisfaction or job satisfaction is perhaps the most frequently studied concept
in organisational behavioural literature (Rust et al., 1996, Luthans, 1998, Snipes et al.,
2005, Gazzoli et al., 2010) and has also received limited attention within the marketing
literature (Parish et al., 2008). Within the service sector the role that employees play has
changed. Employees are beginning to be considered as internal customers. Eskildsen
and Nussler (2000) suggested that employees have evolved from being a resource that
can be exploited to being an asset that needs to be nourished, guarded, developed and
satisfied.
The importance of employee satisfaction in the literature is not surprising as customers
are no longer considered the only important individuals within a service setting. Comm
and Mathaisel (2000, p. 43) indicated that the ‘job satisfaction of employees is just as
important as customer satisfaction’. Rust et al (1996) concurred and noted that
employees are viewed as the internal customer and similarly to customers their
satisfaction is instrumental to the success of an organisation. Furthermore, employee
satisfaction is considered paramount due to research suggesting that employee
satisfaction affects customer satisfaction (Bitner, 1990, Heskett et al., 1994, Rust et al.,
1996). These two concepts have been researched together within the marketing
literature (Heskett et al., 1997, Homburg and Stock, 2004, Wangenheim et al., 2007,
Jeon and Choi, 2012). Along with customer satisfaction, employee satisfaction has been
researched with loyalty or market and financial performance within the organisational
behaviour literature (Eskildsen and Nussler, 2000, Oshagbemi, 2000). However, within
the marketing literature research linking these constructs is unusual and appears to be
limited to research relating to the SPC or satisfaction mirror.

51
Locke (1976, p. 1300) suggested that employee satisfaction is a ‘pleasurable or positive
emotional state resulting from an appraisal of one’s job or job experiences’. Locke
(1976) identifies employee satisfaction as an emotional response that is a present or past
oriented concept. His definition of employee satisfaction has been taken by many
authors as rule of thumb within the literature. Employee satisfaction focuses on the
employee’s job attitude towards the job and is a general degree of happiness towards the
job (Babin and Boles, 1998, Luthans, 1998, Weiss, 2002, Parish et al., 2008).
It has been suggested to be a global reaction to overall job circumstance and affective
reactions to different job factors such as the work environment or pay (Brown and Lam,
2008). According to Eskildsen and Nussler (2000, p 582) ‘every aspect that has to do
with the influence that the job has on the employee as well as the perception that the
employee has on the job/organisation is included in this definition of employee
satisfaction’. It is important to note that the definitions of employee satisfaction are
similar to the basic principle of Internal Marketing (IM). These definitions can be
interpreted as whether or not employees are happy to go to work, if they perceive their
jobs as meaningful or whether their jobs have a negative physical or psychological
effect on them (Eskildsen and Nussler, 2000, Ueno, 2010). Pool (1997, p 272) concurs
and indicates that ‘job satisfaction is an attitude that individuals maintain about their
job’.
52
Pool (1997) indicated that a major goal of researching employee satisfaction is to
understand the complexities of the perceptions employees have and their impact on their
satisfaction. Though employee satisfaction has been clearly defined within the literature
most organisations struggle to understand employee satisfaction, measure it or improve
employee behaviour in the work place (Rust et al., 1996). The measurement of
employee satisfaction is of utmost importance for many organisations (Fosam et al.,
1998, Oshagbemi, 2000, Hsu and Wang, 2008). It is of particular importance in the
service industry due to employee satisfaction impacting directly on customer
satisfaction (Heskett et al., 1994, Fosam et al., 1998, Ueno, 2010). Employees are
internal customers and their satisfaction can influence other internal customers and the
external customer (Brown and Bond, 1995, Homburg and Stock, 2004). Due to this
connection, employee satisfaction has been suggested to be just as important as
customer satisfaction (Rust et al., 1996, Comm and Mathaisel, 2000). Rust et al. (1996)
noted that employees perform for the customer. Bitner (1990) concurred and noted that
employees are performers and that their satisfaction can be seen as a quality assurance
for customers. Vargo and Lusch (2008) further highlight this in suggesting that
organisations are there to serve society.
Pool (1997) noted that Weiss et al. (1967) suggested a five dimensional measure for
measuring employee satisfaction. This included the dimensions of the job itself, pay,
promotion opportunities, supervision and co-workers (Pool, 1997). A more recent
model looking at employee satisfaction is the ‘Employee Satisfaction Index model’
(ESI) by Hsu and Wang (2008). From considering customer satisfaction research, Hsu
and Wang (2008) incorporated key elements of the Customer Satisfaction Index (CSI)
into their ESI model. This model has an ‘aim of simplicity and comparability that can
explore the causal relationship of employee satisfaction’ (Hsu and Wang, 2008, p. 353).
53
Hsu and Wang (2008) noted that their research produced a meaningful and measureable
employee satisfaction index that showed the employee satisfaction level. Homburg et al.
(2009) used a similar measure to Hsu and Wang (2008) and found it to be reliable.
However, Green and Tsitsianis (2005) suggest that research in understanding the factors
affecting employee satisfaction and its implications on behaviour remains quite under
researched. Parish et al (2008) looked at the servicescape affecting employee
satisfaction and suggested further research is needed in examining the role of employee
satisfaction in a service setting. Hsu and Wang (2008) concurred and noted it is crucial
to understand what factors influence employee satisfaction and to understand what
employee satisfaction influences. One important aspect of the employee satisfaction
research is its connection with employee loyalty. Employee loyalty will be looked at
next.
1.3.8 Employee Loyalty
Within the literature the term ‘employee loyalty’ and ‘employee retention’ are often
used interchangeably. Both terms have received a great deal of attention within the
organisational psychology literature (Cotton and Tuttle, 1986, Currivan, 1999, DiPietro
and Milman, 2004) and some more limited attention in the marketing literature (Heskett
et al., 1997, Parish et al., 2008). For the majority of companies and organisations
retention or loyalty is a top priority (Earle, 2003, Gentry et al., 2006). Organisations
desire to have a greater understanding of what employee loyalty is in order to reduce
their costs and increase profits (Rust et al., 1996, DiPietro and Milman, 2004, Whitt,
2006, Hsu and Wang, 2008). In order to help organisations, considerable research has
54
gone into finding out both the drivers of employee loyalty and the outcomes of
employee loyalty. However there has been some disagreement within the literature as to
what loyalty or retention is and how it should be defined (Meyer et al., 1993).
Mak and Sockel (2001) suggest that retention is a construct and not just a single
variable. They suggest that retention can manifest itself in three ways, through turnover,
loyalty or commitment to the organisation and burnout. Employee turnover is
considered the proportion of employees who leave an organisation (Gentry et al., 2006).
DiPietro and Milman (2004) noted that improving retention is related to lower turnover
and Mak and Sockel (2001, p. 268) themselves suggested that ‘lower employee turnover
intent may indicate better employee retention’. Improving retention, in most cases is a
direct result of reducing the turnover in the organisation (DiPietro and Milman, 2004).
Within the literature, loyalty, commitment or retention can be viewed as the opposite of
turnover intention. Foster et al. (2008) noted that the terms commitment and loyalty are
used interchangeably in the literature.
Loyalty is viewed as the proportion of employees who wish to stay committed and
active agents within the organisation. Cramer (1996) noted that loyalty has been defined
as the extent an employee involves themselves with a particular organisation. Eskildsen
and Nussler (2000, p. 582) concurred and suggested that employee loyalty ‘includes
such things as whether or not employees are committed and assume personal
responsibility for their work, and whether or not they feel inclined to look for another
job’.
55
The third variable according to Mak and Sockel (2001) was burnout. However, Cordes
and Dougherty (1993, p. 625) indicated that ‘despite the growing consensus surrounding
the concept of burnout, the distinction between burnout and stress has not been clearly
delineated’. Ganster and Schaubroeck (1991, p 239) argued that burnout is actually a
type of stress more specifically an ‘affective response to stressful work conditions that
featured high levels of interpersonal contact’. Parish et al. (2008) concur and indicate
that job stress is an affective response. Mak and Sockel (2001, p. 268) suggest that
when an employee becomes so ‘stressed that he or she may turn into burn-out mode’.
The literature suggests that burnout is a form of job stress resulting from work demands
and constraints.
Loveman (1988) suggested that employee loyalty can manifest itself in two ways. The
first manifestation is stated commitment or attitude and the second manifestation is
demonstrated commitment or behaviour. Behavioural loyalty is when the employee
continues to increase their relationship with the company or the act of recommendation
(Hallowell, 1996). According to Cramer (1996, p. 389) behavioural loyalty ‘has usually
been conceptualized in terms of the costs of leaving an organization’. Dean (2004)
recommended that if actual or behavioural loyalty cannot be measured that the best
estimate would be the attitudinal measure of loyalty. Attitudinal loyalty is the extent to
which an employee identifies with or is involved with a particular organisation and is
the level of psychological commitment towards the organisation (Cramer, 1996). Mak
and Sockel (2001, p. 261) concurred and proposed that ‘loyalty, or organizational
commitment, has most commonly been studied as attitudinal or affective; it may be
defined as a relative strength of individuals' identification with the involvement in a
particular organization.’ Cramer (1996) also indicate that that there lies several
conceptions of loyalty but that attitudinal or affective commitment is the most
56
frequently studied. Allen and Grisaffe (2001) concurred and suggested that most
researchers would agree that at a general level employee loyalty refers to a
psychological state that characterises the employee’s relationship with the organisation.
Cramer (1996) indicated that loyalty develops slowly since it is not just based on the job
itself but on other aspects in the working environment. Other aspects that have been
related to employee loyalty are employee satisfaction, which is considered to play a
large role (Rust et al., 1996) and physical environmental stimuli (Parish et al., 2008).
According to Gentry et al. (2006) loyalty needs to be examined on multiple levels and
an increased understanding of a more dynamic approach to studying loyalty would be
beneficial to the literature. Cotton and Tuttle (1986, p. 66) suggested that ‘research
needs to be expanded and additional variables used’ to understand the relationship
between work environments and loyalty. The physical work environment is a variable
that is frequently untouched in understanding loyalty. Parish et al. (2008, p. 236) note
that research on the effects of the physical work environment (servicescapes) on
employee behavioural responses is sparse and that ‘the physical places in which services
are performed deserve more attention in the service literature’. Foster et al. (2008)
concurred and noted that there is a gap in the literature in understanding employee
loyalty in retail environments.
To date there is limited research in the marketing literature examining employee loyalty
and that research has instead focused on customer loyalty (Foster et al., 2008). This is
surprising as employees play a central role in the SPC. Maertz et al. (2007) indicated
that understanding employee loyalty will likely be a primary concern for organisations
in the future. It is of particular importance in a retail setting where interaction between
loyal employees and customers appears to be an important part of a stores offering
57
(Foster et al., 2008). According to Foster et al. (2008, p. 425) ‘loyal employees who are
eager to meet the needs of customers and as a result deliver high levels of customer
service could act as a source of differentiation’. Batt (2002, p. 589) concurred and
suggested that ‘long term employees have the tacit firm-specific skills and knowledge
and often the personal relationships with customers needed to more effectively interact
with customers’. Employees that build a relationship with the customer may encourage
customer loyalty (Rust et al., 1996, Hsu and Wang, 2008, Jeon and Choi, 2012), which
will be looked at next.
1.3.9 Customer Loyalty
Han and Ryu (2009) indicated that the benefits of creating and maintaining customer
loyalty is a top priority in the service sector. Harris and Ezeh (2008) suggested that
customer loyalty has become a very popular area of research due to the immense
benefits available to organisations by the retention of a single customer. Retaining a
single customer can have a large impact on a company’s profits and due to this strong
connection organisations are keen to understand customer loyalty (Reichheld et al.,
2000). Similarly, Pritchard et al. (1999, p. 333) suggest that ‘understanding how or why
a sense of loyalty develops in customers remains a crucial management issue.
In defining customer loyalty Oliver (1999, p. 34) suggests that it is ‘a deeply held
commitment to rebuy or repatronize a preferred product/service consistently in the
future, thereby causing repetitive same-brand or same brand-set purchasing, despite
situational influences and marketing efforts having the potential to cause switching
58
behavior.’ Similarly to employee loyalty, Jacoby and Kyner (1973) suggest that
customer loyalty can be defined in two distinct ways within the marketing literature.
Firstly it can be defined as an attitude. The attitudinal dimension considers the
psychological or decision making commitment towards the service or product
(Kandampully and Suhartanto, 2000). According to Bowen and Chan (2001, p. 214)
‘attitudinal measurements use attitudinal data to reflect the emotional and psychological
attachment inherent in loyalty’. These different emotions or feelings can create a
customer’s overall attachment to a service, product or organisation (Han and Ryu,
2009). Hallowell (1996, p. 28) noted that ‘these feelings define the individual’s (purely
cognitive) degree of loyalty’.
Secondly, customer loyalty can be defined as behavioural. The behavioural dimension
considers consistent repeat patronage or repeat purchase frequency (Han and Ryu,
2009). It can consist of continual purchase of a product or service from the same
supplier, increasing the scale or scope or a relationship or by telling others about the
service or product (Yi, 1989). Behavioural loyalty includes relationship continuance or
act of recommendation and result from customer belief that the value or quality received
from one supplier is greater than that available from a competitor (Hallowell, 1996).
According to Han and Ryu (2009, p. 492) ‘loyalty is a consequence of consistent repeat
patronage/repeat purchase frequency of a single store/brand as well as favorable
attitude.’ Though often not specified within academic papers, customer behavioural
loyalty is the most often researched in the literature (Zeithaml et al., 1996, Harris and
Ezeh, 2008, Han and Ryu, 2009, Yee et al., 2011)
59
In his research Oliver (1999) initially suggests that there are three phases to loyalty,
cognitive, affective and conative. The cognitive phase is an information phase and
according to Oliver (1999) is of a shallow nature. The affective stage involves an
emotional response. ‘Commitment at this phase is referred to as affective loyalty and is
encoded in the consumer's mind as cognition and affect’ (Oliver, 1999, p. 35). These
two phases appear to tie in with what has been termed attitudinal loyalty. The third
phase, the conative phase is the commitment to repurchase. Oliver (1999) than indicates
that the conative stage is only a behavioural intention stage and that a fourth stage,
action loyalty also exists. Action loyalty is the commitment of the action of re-buying.
These last two stages appear to relate to behavioural loyalty. Past literature suggests that
attitudinal loyalty and behavioural loyalty are sufficient in understanding customer
loyalty.
Oliver (1999) notes that in order to detect customer loyalty, customers beliefs/affects
(attitudinal) and intention (behavioural) need to be researched. However in recent years,
some have argued that there is a disadvantage of including the behavioural dimension in
assessing the level of customer loyalty (Back, 2005, Han and Ryu, 2009). Tepeci (1999)
suggests that repeat purchases are not always an outcome of the evaluative or affective
decision making commitment to the store. The decision process should be intentional
and the behavioural dimension may disregard the affective element (Tepeci, 1999, Han
and Ryu, 2009). The repeat purchasing may not indicate that the customer maintains a
favourable emotional commitment to the provider (Bowen and Chen, 2001). Repeat
purchase may be occurring due to convenience or lack of choice (Tepeci, 1999). As Wu
(2011, p. 241) highlighted ‘a convenient location may serve as another factor in
maintaining loyalty’.
60
Harris and Ezeh (2008) indicated that there has been a primary focus on product based
customer loyalty or brand loyalty and that loyalty to service organisations has remained
under researched. Unlike the consumers good industry repeat purchasing may not be an
adequate indicator of customer loyalty because loyalty in a service sector involves an
emotional commitment (Han and Ryu, 2009). Back (2005) and Wu (2011) concur and
recommends using an attitudinal approach in the service sector for finding the
customers emotional commitment to the provider.
1.4 Conclusion
Employees have been emphasised as being core to delivery customer service within the
the SPC. A service environment is where the service delivery takes place, can be
hedonic or utilitarian in nature, and is where customers and employees can experience
different affective and cognitive processes. Key constructs in the service literature relate
to service quality, customer satisfaction, employee satisfaction, customer loyalty and
employee loyalty. Each of these constructs are reflected in the SPC which proposes a
causal chain linking employee satisfaction through to financial performance, through
the mediating constructs of customer satisfaction, employee satisfaction, customer
loyalty and employee loyalty (Heskett et al., 1994, Loveman, 1998).
The next chapter examines the environmental psychology literature. This relates to
Mehrabian and Russell’s (1974) pioneering work on the Stimulus Organism Response
(SOR) model. The environmental psychology chapter forms the foundations for chapter
three on servicescapes and chapter four on work climates.
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2 CHAPTER 2 The Mehrabian and Russell Framework
Pleasure is nature’s test, her sign of approval. When man is happy, he is in harmony
with himself and his environment.
Oscar Wilde (1891)
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2.1 Introduction
This chapter introduces environmental psychology which forms the foundation for
chapter three on servicescapes and chapter four on work climates. Stemming from
environmental psychology, the Mehrabian and Russell’s (1974) model plays an
important theoretical role in both the services literature and the work climate
literature. This chapter will discuss in detail the Mehrabian and Russell (1974) model
and the Stimulus Organism Response (SOR) model. The SOR forms the foundation
for the Mehrabian and Russell (1974) model. The organism, or O, relates to the
emotional response and Mehrabian and Russell (1974) identifed Pleasure and
Arousal as the two main emotional responses. However, there are three emotional
responses, Dominance being the third dimension. The role of Dominance is
examined separately due to it not being addressed in the O component.
Following discussion on the SOR paradigm a critique of the Mehrabian and Russell
(1974) model and their proposed hypothesis will be examined in more detail. The
concept of Target-Arousal will then be discussed which introduces ‘High’ and ‘Low’
Target-Arousal situations. This helps to understand in which situations the
Mehrabian and Russell (1974) model has been found to be theoretically beneficial.
Lazarus (1991) cognition theory of emotion model is briefly discussed at the end of
the chapter as it has been proposed as an alternative model to Mehrabian and Russell
(1974) model.
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2.2 Environmental Psychology
Holahan (1986) noted that in the 1970s there was a trend towards developing the
theory of environmental psychology. During this time Proshansky et al. (1970a, p. 7)
indicated that ‘the structure of interrelated concepts, assumptions, and principles
required for a theoretical definition of environmental psychology simply does not
exist’. Craik (1973) reviewed a collection of readings within environmental
psychology in order to gain a better idea of what environmental psychology entailed.
From the review Craik (1973, p. 412) indicated that ‘a broad, thin but rapidly
expanding layer of empirical research underlies current knowledge in environmental
psychology’. Proshansky et al. (1970b) noted that by pointing out events or
phenomena within studies of environmental psychology, that an attempt to define it
can be made.
Since Proshansky’s et al. (1970a) study there has been a large and steadily growing
body of literature within the field of environmental psychology (Bitner, 1992).
Within this growing literature there have been attempts to define the nature of
environmental psychology. Craik (1973) noted that it was the scientific study of the
interplay between human behaviour and the environment. Holahan (1986, p. 400)
concurred and indicated that ‘environmental psychology studies the interrelationship
between the physical environment and human behaviour and experience’.
Over the years environmental psychology was concerned with two major topics:
firstly, the emotional impact of the physical stimuli and secondly the effects of the
physical environment on decisions to approach or avoid those environments (Craik,
64
1973, Mehrabian and Russell, 1974, Bitner, 1992, Huang, 2003). Mehrabian and
Russell (1974) indicated that an area of concern for them was the effects of the
physical environment on emotional responses of the individuals within that
environment. Proshansky et al (1970a) initially undertook pioneering research in
their review of studies in environmental psychology. Their survey comprised of
studies that were mixed in their interests, findings, and methodologies. Proshansky et
al. (1970a, p. 4) noted that ‘not one of them, (the environmental studies), fits neatly
into an established scientific discipline’.
Mehrabian and Russell (1974) agreed with Proshansky et al. (1970a) and noted the
difficulty of integrating or analysing studies that contained many different dependent
and independent variables. For instance comparing Berlyne’s (1960) study on the
effects of complex versus simple stimuli on arousal, with Thayer’s (1967) study of
the measurement of activation through self-report, or with Proshansky’s et al (1970b)
study of the influence of the physical environment on behaviour, was seen to be
exceptionally complex as there was no framework by which they could be compared.
Mehrabian and Russell (1974) sought to establish a framework in order to outline the
important variables that occur in most situations. According to Mehrabian and
Russell (1974, p. 2) a ‘framework would indicate which variables are relevant or
irrelevant, which ones should be explored and which ones need to be controlled’.
Proshansky et al (1970a) noted that many difficulties could arise in establishing a
general theoretical framework.
65
2.3 The Mehrabian and Russell Framework
Mehrabian and Russell (1974) attempted to present an integrated framework that
provided a broad overview of the environment. To begin it is important to point out
the two parts to their framework. Firstly their model presents an outline for studying
the problems of environmental psychology and indicates the important variables that
occur in most situations. According to Machleit and Erogula (2000) the Mehrabian
and Russell model is most frequently used in environmental psychology and is
widely used in marketing to evaluate emotional response. Figure 2.1 shows the
Mehrabian and Russell model. Secondly, their framework identifies three
hypotheses. For a clearer understanding these will be outlined after the framework.
THE ENVIRONMENT BEHAVIORAL

RESPONSES
Sense modality variables
(e.g colour and temperature) Approach-avoidance
PRIMARY
EMOTIONAL (which includes physical
Information rate approach, exploration,
RESPONSES
(Characterising the spatial and affiliation, performance,
Pleasure
temporal relationships among the or other verbal and
Arousal
stimulus components of an nonverbal
Dominance
environment) communications of
Characteristic emotions preference)
associated with PERSONALITY
Figure 2.1 Mehrabian and Russell Model

Source: Mehrabian and Russell (1974, p. 8)
66
Yalch and Spangenberg (2000, p. 140) noteed that ‘Mehrabian and Russell (1974)
developed a framework for analysing the effects of environments on individuals,
emphasising the role of nonverbal responses to environmental factors as a major
determinant of behaviour’. Kenhove and Desrumaux (1997) concured and indicated
that the Mehrabian and Russell (1974) framework maintains that an individual’s
response (perceptions and behaviour) within a certain environment is affected by the
emotional states created by that environment. Mehrabian and Russell (1974, p. 8)
stated that the ‘three emotional response variables (Pleasure, Arousal, Dominance)
summarise the emotion-eliciting qualities of environments and also serve as
mediating variables in determining a variety of approach-avoidance behaviours such
as physical approach, work performances, exploration, and social interaction’.
Huang (2003) agreeed that Pleasure, Arousal and Dominance are the three
dimensions that characterise individual’s feelings in the environment. Each of these
emotional responses will be discussed in detail but firstly the model itself will be
looked at.
Figure 2.2 shows the revised format of the Mehrabian and Russell (1974) model that
has been used within the store environments literature. Donovan and Rossiter (1982)
introduced the model to retail store environments. To date, the revised model is most
frequently used in studies of service environments. Appendix 1 provides a detailed
table of literature examining the Mehrabian and Russell (1974) model (Kearney et
al., 2007).
67
Environmental Emotional States: Approach or Avoidance
Stimuli Pleasure-Arousal Responses
(S) (O) (R)
Figure 2.2 SOR framework

Source Mehrabian and Russell (1974, p.8) revised format from Tai and Fung (1997,
p. 315)
2.4 The S-O-R Paradigm
Through the use of the SOR paradigm, the Mehrabian and Russell (1974) model
considers the store environment, its effects on emotional behaviour and its
contribution to shopping behaviour. The (S) component is the environmental
stimulus; the (O) component is the emotional states and the (R) is the approach-
avoidance response. The (S) component identifies that specific stimuli are said to
affect the emotional states of Pleasure and Arousal, the (O) component, which in
turn affects the (R) component, the Approach-Avoidance behaviours (Aubert-Gamet,
1996).
Donovan and Rossiter (1982, p. 36) suggested that by ‘using a S-O-R paradigm, they
[Mehrabian and Russell 1974] offer a parsimonious description of environments,
intervening variables, and behaviours relevant to the retail setting’. Donovan et al
(1994) indicated that the Mehrabian and Russell (1974) model focuses mainly on the
Organism-Response aspects. Spangenberg et al. (1996) emphasised that
environmental psychology draws from the S-O-R paradigm. According to Donovan
and Rossiter (1982, p. 36), ‘an adequate S-O-R model has the following requisites:
Stimulus taxonomy, a set of intervening or mediating variables and taxonomy of
68
responses’. In 1974, Mehrabian and Russell suggested a link existed between the
variables and the response taxonomy. In later research, Donovan and Rossiter (1982)
and Tai and Fung (1997, p. 315) found support for the link and identified that ‘an S-
O-R model relates factors of the environment (S) to approach-avoidance behaviour
(R)’. However, as noted by Mehrabian and Russell (1974), it can be difficult to
measure the effects of the physical environment on the customer. These difficulties
are highlighted in the next three sections, which relate to the S, the O and the R of
Mehrabian and Russell’s (1974) model. The difficulties are also further dicussed in
chaper three, which focusses on the Servicescape.
2.4.1 The (S) Component
According to Aubert-Gamet (1996, p. 27) ‘the stimulus factors are physical features
(colour, store layout, lighting, music, ambient factors)’. This is the (S) component.
The stimulus can offer vast amounts of information to the customer through
environmental cues (Tai and Fung, 1997). Iyer (1989) noted that in a shopping
context the task environment can act as an external memory and provides vast
amount of stimulus information. Mehrabian and Russell (1974) proposed the use of
an ‘information rate’, or ‘load’ in order to overcome the difficulty in measuring the
information the customer receives. Spies et al. (1997, p. 2) noted that ‘the
information rate usually is higher for new and unusual than for familiar stimuli’.
Mehrabian (1976, p. 12) indicated that an ‘environment having a high information
rate is a ‘high-load’ or ‘loaded’ one and a ‘low-load’ environment is one having a
low information rate.’
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Information load is a general measure of environmental stimulation that is applicable
across many and various social and physical situations. Spies et al. (1997, p. 2)
suggested that ‘by information rate (we) mean the number of information units that
are presented within a certain time interval’. By means of the ‘information rate’ or
‘load’ concept the model includes important aspects such as complexity, novelty,
crowding and harmony (Mehrabian and Russell, 1974). Tai and Fung (1997, p. 317)
agreed and defined the information rate as the ‘degree of stimulus from novelty and
complexity’.
Novelty can involve the unexpected, the surprising, the new or the unfamiliar.
Mehrabian and Russell (1974, p. 82) noted ‘the terms novel, rare, expected and
surprising all refer to the improbability of an event’. In discussing a novel
environment Mehrabian (1976, p. 13) noted ‘if a setting is new or unfamiliar, it
makes us uncertain’. ‘The complexity of an environment has to do with how many
elements, features, or changes it contains’ (Mehrabian, 1976, p. 13). The more novel
and complex an environment the higher the information rate (Tai and Fung, 1997,
Mattila and Wirtz, 2006). Mehrabian (1976, p. 13) indicated that ‘the more elements
or changes, the greater the uncertainty and hence the higher the load’.
The effects that the rate or load can have on the customer can vary. In a high load
environment a customer may feel excited, aroused or stimulated, a low load
environment can have the opposite affect and cause the customer to feel calm
relaxed or even sleepy (Donovan and Rossiter, 1982). Mattilla and Wirtz (2006, p
230) concurred and suggested that ‘environments are highly arousing, i.e. have a
high information, when they are complex, have change or movement in them, and
70
have new and unexpected elements’. Mehrabian (1976, p. 15) noted that ‘the load of
a given environment causes certain emotional reactions in a particular person.’
Aubert-Gamet (1996, p. 27) concurred and indicated that ‘specific environmental
stimuli, are said to affect the emotional states of pleasure and arousal, which in turn,
affect approach or avoidance behaviours’. The (S) component of environmental
stimuli affects the (O) component of the emotional state.
2.4.2 The (O) Component
According to Mehrabian and Russell (1974) it is first necessary to identify the
emotional responses that are the immediate result of stimulation and that occur in
varying environments. Lindsley (1957, p. 273) indicated that ‘emotion is one of the
most complex phenomena known to man’ and further notes that the ‘final description
of emotions must be in terms of a reacting mechanism’. According to Mehrabian and
Russell (1974, p. 17) ‘studies of intermodality associations, physiological responses
to stimuli, and the semantic differential all suggest that there exists a limited set of
basic emotional (affective, connotative, feeling) responses to all stimulus situations’.
In further research Russell and Mehrabian (1976) noted that there are basic
emotional responses to all types of stimuli.
Before discussing the basic emotions it must be noted that the Mehrabian and
Russell (1974) model makes use of intermodality to identify the emotional
responses. Temperature, taste and sound are different types of modalities that can be
found. It is important to consider several dimensions of response within each of the
modalities (Mehrabian and Russell, 1974). Intermodality refers to the associations
71
that are used among the modalities. For example commonly accepted thermal
associations for various ‘spicy’ foods is ‘hot’ and colours such as red, orange and
yellow are considered ‘warm’ (Mehrabian and Russell, 1974). The model uses
intermodality in an effort to identify responses common to all types of stimuli,
regardless of the sense modality stimulated.
The existence of some basic response dimensions also becomes evident in
physiological studies where certain effects are found to be common to stimulations
in the sense modalities (Mehrabian and Russell, 1974). In exploring the concept of
arousal Berlyne (1960, p. 48) noted that ‘psychologists are beginning to recognise
degree of arousal as a dimension or continuum. The lower pole of the continuum is
represented by sleep or coma, while the upper pole would be reached in states of
frantic excitement’. Thayer (1967) concured and noted that the usefulness of an
activation continuum, also called an arousal continuum, has been verified through
research studies. The physiological studies support the idea that there are basic
reactions and distinguish Pleasure and Arousal as two such dimensions.
Research on Semantic differential scales, which is a type of rating scale designed to
measure the conative meaning of objects, events, and concepts, has also supported
the idea of basic reactions. The semantic differential has helped to characterize
human judgments, or reactions to stimuli of any degree of complexity (Snider and
Osgood, 1969). From their research on semantic scaling Osgood et al. (1957, p. 72)
suggested that ‘three factors appear dominant…and roughly the same orders of
magnitude- evaluation, potency and activity’. Osgood and Suci (1955, p. 54)
notedthat it is remarkable ‘that such a large portion of the total variance in human
72
judgement or meaning can be accounted for in terms of such a small number of basic
variables’. The three semantic variables correspond with the three dimensions from
physiological studies, Pleasure, Arousal and Dominance. The semantic differential
further indicates that the three dimensions are bi-polar; that is, Pleasure extends
along a single dimension from extreme displeasure to extreme pleasure, and
similarly for Arousal and Dominance (Osgood and Suci, 1955, Snider and Osgood,
1969).
From past research on inter-modality, physiological studies and semantic scaling,
Mehrabian and Russell (1974) choose their three basic emotional dimensions that
mediate response, the (O) component. These three dimensions are bi-polar and are
known as Pleasure- displeasure, Arousal-nonarousal and Dominance-submissiveness
and tend to be called PAD (Tai and Fung, 1997). Holbrook et al (1984, p. 729) noted
that the PAD dimensions show ‘a clear conceptual parallel to Osgood et al. (1957)
well established dimensions of meaning, namely, evaluation, activity, and potency’.
According to Russell and Mehrabian (1976, p. 63) who supported Osgood et al’s
(1957) research ‘emotional reactions occur in stimulation any sense modality and to
stimulation varying in all degrees of complexity or quality’.
According to Tai and Fung (1997) and Gilboa and Rafaeli (2003) Pleasure-
displeasure is a state that refers to the degree to which a customer feels enjoyment,
happiness, satisfaction or contentment within the environment, Arousal-nonarousal
distinguishes between feelings of stimulation, excitement or frenzied arousal and
relaxation, boredom or sleepiness and Dominance-submissiveness is the level of
control, competence, importance that the customer feels they have over the situation.
73
Mehrabian and Russell (1974) and Russell (1980) indicated that the Dominance-
submissive dimension was not as important as the Pleasure-displeasure and Arousal-
nonarousal dimensions. According to Russell (1980) and Donovan and Rossiter
(1982), the dominance dimension failed to predict approach-avoidance behaviours.
Russell (1980) also noted that additional dimensions are sometimes obtained, but
there is little consensus on their interpretation.
Amato and McInnes (1983) suggested that arousal was a direct function of the
‘information rate’. Mattila and Wirtz (2006, p. 230) agreed and noted that ‘the
Arousal dimension depends largely on the information rate or load of an
environment’ and ‘Pleasure is a direct, subjective response to the environment
depending on the individuals degree of liking of the environment’. The Mehrabian
and Russell’s (1974) and Russell’s (1980) models contained eight major emotional
states: Russell’s (1980, p. 1164) model was called ‘eight affect concepts in a circular
order’ and Mehrabian and Russell’s (1974) model was called ‘Two dimensional of
emotion and eight major emotional states’. Both models suggested that any
environment will produce an emotional state that can be characterised between the
two emotional dimensions of Pleasure and Arousal. Russell (1980, p. 1162)
suggested that ‘affected states are, in fact, best represented as a circle in a two-
dimensional bipolar space’. Bitner (1992, p. 63) agreeed and suggested that any
environment ‘can be located in a two dimensional space reflecting peoples’
emotional response to the place’. See figure 2.3 for the depiction of the Mehrabian
and Russell (1974) Model.
74
According to Menon and Kahn (2002) a dimensional approach to explaining
emotions has been found to be reliable in past research. Donovan and Rossiter
(1982), Donovan et al (1994), Tai and Fung (1997) through the use of the Mehrabian
and Russell (1974) model used a dimensional approach in their research. Mehrabian
and Russell’s (1974) and Russell’s (1980) models contain a horizontal dimension to
indicate the Pleasure-displeasure dimension and a vertical dimension illustrating the
Arousal-nonarousal dimension
D1 Arousal
Distressing Exciting
D2
Displeasure Pleasure
Gloomy Relaxing
Non-Arousal
Figure 2.3 Two Dimensions of Emotion and Eight Major Emotional States
Source: Mehrabian and Russell (1974)
75
(D1) is the first dimension and is called the Arousal-nonarousal dimension. (D2) is
the second dimension and is called Pleasure-displeasure dimension. The points of
‘distressing’, ‘relaxing’, ‘gloomy’ and ‘exciting’ represent emotions that can be
found along both dimensions. Mehrabian and Russell (1974) suggested variations in
PAD constitute the common core of human emotional responses to all situations. For
example, the feeling of boredom or fatigue may be described as one that is low on
Pleasure and Arousal, anxiety and distressing rate high on Arousal but low on
Pleasure. Relaxation, contentment, and comfort rate high on Pleasure but low on
Arousal (Mehrabian and Russell, 1974).
The Mehrabian and Russell (1974) model suggested that any environment will
produce an emotional state that can be characterised between the two emotional
dimensions of Pleasure and Arousal. Donovan and Rossiter (1982, p. 56) noted that
the ‘correct emotional combination of pleasantness and arousal created by store
atmosphere can stimulate shopping behaviour within the store’. Mehrabian and
Russell (1974) hypothesised that Pleasure and Arousal interact, with an increase in
Arousal leading to higher levels of approach in pleasant environments and to lower
levels of approach in unpleasant environments. This is their first hypothesis, which
will be discussed later in this chapter.
Many authors (see appendix 1) have recognised the prevailing role of Pleasure and
Arousal in the context of store environment. Within a pleasant environment where a
positive atmosphere exists, customers approach behaviour, their willingness to stay
longer, spend more money will be higher. In unpleasant environments, the opposite
forms and avoidance behaviour will be higher. As Mehrabian (1976, p. 8) indicated
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‘it is assumed that people’s feelings or emotions are what ultimately determine what
they do and how they do it’. The approach-avoidance response is the (R) component
and will be discussed next.
2.4.3 The (R) Component
Responses to the environment can be classed into two opposing behaviours
Approach and Avoidance and is called the (R) component. This can be seen in the
Mehrabian and Russell model (Figure 2.1). Donovan and Rossiter (1982, p. 41)
indicated that ‘such behaviours are a result of the emotional states an individual
experiences within the environment’. Mehrabian and Russell (1974, p. 99)
hypothesised that Approach behaviours ‘can be increased (or decreased) by simply
making the surrounding environment more pleasing (or unpleasant)’.
According to Turley and Milliman (2000, p. 193) ‘approach behaviours are seen as
positive responses to an environment such as desire to stay in a particular facility and
explore it. Avoidance behaviours include not wanting to stay in a store or to spend
time looking or exploring it’. Yalch and Spangenberg (2000, p. 140) concured and
suggesed ‘approach-avoidance behaviours can be grouped into four categories based
on the type of behaviour: time, exploration, communication, and satisfaction’.
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Mehrabian and Russell (1974), Mehrabian (1976), Donovan and Rossiter (1982),
Bitner (1992) and Hoffman and Turley (2002) have all classified these responses in
the following manner.
1. A desire physically to stay in (approach) or to get out of (avoid) the
environment.
2. A desire or willingness to explore or look around the environment (approach)
or a tendency to remain inanimate in the environment (avoid) and not interact with it.
3. A desire or willingness to communicate with others in the environment
(approach) as opposed to a tendency to avoid or ignore communication attempts
from others (avoid)
4. The degree of enhancement (approach) or hindrance (avoid) of performance
and satisfaction with the task performers.
Morrin and Ratneshwar (2000, p. 158) noted that ‘these tendencies are often
measured in terms of amount of time physically spent in a particular environment or
in one’s evaluation of the environment’. Mehrabian and Russell (1974) indicated that
these responses are appropriate in describing behaviours within the service facility.
Donovan and Rossiter (1982) agreed and indicated that the ‘physical’ can relate to
store patronage, the intentions at a basic level to move around the shop, ‘explore’ can
relate to the searching of a specific item within the broad or narrow range of
offerings, ‘communication’ could be the interaction with staff or with other
customers in the environment and ‘performance and satisfaction’ can relate to
repeat-shopping or the time and money expenditure in the environment.
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Kenhove and Desrumaux (1997, p. 353) noted that the ‘model specifies a conditional
interaction between Pleasure and Arousal in determining approach-avoidance’.
Donovan and Rossiter (1982, p. 39) indicated the condition and make clear ‘in a
neutral i.e. neither pleasing nor displeasing environment, moderate Arousal enhances
approach behaviours whereas very low or very high Arousal leads to avoidance
behaviours’. Mehrabian and Russell (1974) noted that approach behaviours of all
types increase as a person experiences increased Pleasure. Within a pleasant
environment where a positive atmosphere exists customers approach behaviour, their
willingness to stay longer, spend more money will be higher. In unpleasant
environments the opposite forms and avoidance behaviour will be higher. Bitner
(1992) indicated that the same holds true for employees in the service setting.
Within a pleasing environment, the higher the Arousal, the greater the approach
behaviour and the same but opposite result holds true for an unpleasant environment,
in that high Arousal leads to high avoidance (Donovan and Rossiter, 1982). Gilboa
and Rafaeli (2003, p. 197) agreed that ‘in pleasant environments, an increase in
Arousal was argued to increase approach behaviours, whereas, in unpleasant
environments, an increase in Arousal was suggested to motivate more avoidance
behaviours.’ To date the literature on store environmental stimuli has used the
Mehrabian and Russell (1974) model in alternative ways. Many authors over the
years have found support for Mehrabian and Russell’s (1974) model, while others
have questioned the framework (See appendix 1). Over the years the model has been
altered slightly or has been built upon in order to suit the role it played in research.
For example Bitner (1992) developed a model called the ‘servicescape’ model which
shared similarities with the Mehrabian and Russell (1974) model. Wirtz et al. (2000)
79
introduced the concept of Target-Arousal in order to understand in what situations
the model was useful. By critiquing the model one can then understand fully the
benefits of using the model for store environment research. Before critiquing the
model however, the role of Dominance will be looked at. As previously mentioned
the Dominance dimension was not part of Mehrabian and Russell’s (1974) two
dimensional model but is part of the PAD conceptualisation of emotions.
2.5 The Role of Dominance
Up until 1999 the role that Dominance may play had been pushed to one side. This
third dimension of Dominance-submissiveness is less used in understanding the
emotional response which mediating behaviour. Russell and Mehrabian (1976) and
Russell (1980) stressed the important of Pleasure and Arousal and not of Dominance.
Their models excluded the role of Dominance and did not explain how Dominance
may affect behaviour. Donovan and Rossiter (1982) noted that Dominance was not
an important factor in determining behaviour. However the reasoning behind not
considering the dimension as important in their research could stem from Mehrabian
and Russell (1974) themselves who did not stress the importance of the dimension.
Foxall and Greenley (1999) pointed out that the failure to find a role for Dominance
might be due to the narrow range of customer settings used in past studies. They
noted that researchers have generated settings on a random convenience basis and
also had focussed on retail settings.
Similar to Russell and Mehrabian (1976), Bellizzi and Hite (1992) and Baker et al
(1992) did not focus on Dominance but rather focussed on Pleasure and Arousal. The
80
lack of knowledge of the Dominance dimension occurres frequently in the literature.
Foxall and Greenley (1999, p. 150) noted that ‘Dominance has made a poor showing
in investigations of the role of emotional mediators of consumer and other human
behaviour’. Gilboa and Rafaeli (2003, p. 198) concurred and indicated that ‘the role
of Dominance in relation to approach-avoidance behaviours remains unclear and has
received attention in very few studies’. Yalch and Spangenberg (2000, p. 140)
indicated that ‘it remains unclear whether difficulties in identifying behaviours
associated with Dominance reflect its small influence on behaviour or the need for
improved measurement’. In 2000, Yalch and Spangenberg integrated the store
environmental factors and shopping behaviours into the Mehrabian and Russell
(1974) model. They paid particular attention to music in retail settings within their
research. Their findings indicated that all three emotional states, PAD, were affected
by the music. Newman (2007) also found support for the role of Dominance and
suggested that its dimensionality was evident in an airport setting.
Foxall and Greenley (1999) took a slightly different approach to Donovan and
Rossiter’s (1982) and Donovan et al.’s (1994) methodology in order to study the
dimension of Dominance. Foxall and Greenley (1999) combined the use of a
Behavioural Perspective Model (BPM) with the Mehrabian and Russell (1974)
model in order to investigate the role of Dominance. According to the BPM, aspects
of customer behaviours, such as approach-avoidance and emotional responses, can
be predicted from two dimensions of situational influence (Foxall, 1998). The first
situational influence is from the scope of the customer behaviour setting. The second
influence is formulated by the pattern of utilitarian and informational reinforcement
81
signalled by the environmental setting, which has been primed by the customers
learning history (Foxall, 1998, Foxall and Greanley, 1999).
The customer behaviour setting refers to the actual setting where the customers’
behaviour takes place, such as a restaurant or cinema. The setting forms a continuum
from closed to open (Foxall, 1998). In a closed setting the consumption or purchases
are mostly controlled by staff or management (Foxall and Greanley, 1999). Foxall
and Greenley (1999, p. 151) noted that in a bank orderly queues are formed to
‘minimise behaviour that is unconnected with the efficient carrying out of
transactions’. This would be considered a closed setting and is characterised by
negative reinforced behaviour (Foxall and Greanley, 1999).
An open setting lacks physical, social or verbal pressures to conform to a particular
pattern of behaviour (Foxall, 1998). In an open setting customers’ have control over
what shops they visit, what brands to consider and then which ones to buy if desired.
Foxall and Greenley (1999, p 151) noted that ‘behaviour in an open setting is usually
positively reinforced’. The second element of situational influence is the patterns of
reinforcement. Foxall and Greenley (1999) indicated that there are two
reinforcements: utilitarian and informational. These patterns of reinforcement
usually occur together and supply the customer with a clearer understanding of their
level of achievement in terms of their purchases and consumption. From their
findings Foxall and Greenley (1999) showed that Pleasure, Arousal and Dominance
explain customer’s verbal expressions of approach-avoidance.
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It is also important to emphasise that the responses are verbal and not emotional
responses or approach-avoidance behaviours. However the authors indicated that
their findings are of importance and that further research should be carried out with
the use of BPM. As mentioned the role that Dominance may play in the service
environment has gained some attention in recent years (Newman, 2007, Lio and
Rody, 2009). However the main focus has been on Arousal and Pleasure (Vilnai-
Yavetz and Gilboa, 2010, Morrison et al. 2011, Lin and Worthley, 2012). A critique
of the main three Mehrabian and Russell’s (1974) hypotheses facilitates in
understanding more comprehensively the role that each dimension has played in
understanding the emotional response.
2.6 A Critique of the Hypotheses
The O component of the Mehrabian and Russell (1974) model was reviewed by
Russell and Mehrabian (1976) and Russell (1980). Russell and Mehrabian (1976)
supported the PAD and in later research Russell (1980) developed a similar two-
dimensional model based on Mehrabian and Russell (1974) PAD. Russell (1980)
indicated that a two-dimensional model was acceptable in explaining emotional
states. It was Donovan and Rossiter (1982) who first applied the Mehrabian and
Russell (1974) model to the study of store atmosphere. Their study made a major
contribution to the literature by establishing the validity of the relationship between
store environments, emotional states, and behavioural intentions. Their study drew
attention to and found support for Mehrabian and Russell’s (1974) first hypothesis.
83
Since Donavan and Rossiter’s (1982) pioneering study, the Mehrabian and Russell
(1974) model has been used to research store environments. Over the years there has
been support for and against the model and its three hypotheses.
Mehrabian and Russell’s (1974) first and second hypothesis will be discussed below,
followed by the third hypothesis.
The first hypothesis
Pleasure and Arousal interact, with an increase in Arousal leading to higher levels of
approach and affiliation in pleasant environments and to lower levels of approach
and affiliation in unpleasant environments.
The second hypothesis
Approach and affiliation behaviours were said to increase linearly as environments
are experienced as being more pleasant.
The third hypothesis
The relationship of Arousal with approach-avoidance was said to be an inverted-U
shape, with people being most responsive at middle levels of arousal.
Donovan and Rossiter (1982) examined the approach-avoidance behaviour through
the use of PAD. Their study supported Mehrabian and Russell’s (1974) first
hypothesis, that high arousal should be positively correlated with approach
behaviour. Amato and McInnes (1983) also examined Mehrabian and Russell’s
(1974) hypothesis. Their findings gave strong support to the Mehrabian and Russell
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first and second hypotheses. Amato and McInnes (1983, p. 121) found ‘that the
description of environments in terms of Pleasantness and Arousal provides a
parsimonious model for accounting for some behavioural difference across diverse
environments’.
Bellizzi and Hite’s (1992) study on the effects of colour used PAD measures as
modified by Donovan and Rossiter’s (1982) study, in retail environments. Their
findings were consistent with Donovan and Rossiter’s (1982) study, in that they
found a statistical association between Pleasure and approach-avoidance behaviour.
This concured with and gave strong support to Mehrabian and Russell’s (1974) first
and second hypotheses.
Baker et al. (1992) examined the Mehrabian and Russell (1974) model and
specifically looked at ambient and social cues. Their study hoped to refine and
extend the work of Donovan and Rossiter (1982). Baker et al. (1992, p. 457) noted
that their ‘study supports Donovan and Rossiter’s (1982) finding that the Mehrabian
and Russell (1974) model is applicable to a retail setting’ and that ‘affective states
produced by the store environment do influence consumers’ willingness to buy’.
Thus Baker et al. (1992) supported Mehrabian and Russell (1974) first hypothesis.
Donovan et al. (1994) followed up and extended research carried out by Donovan
and Rossiter (1982). Donovan et al. (1994, p. 284) indicated that ‘none of the studies
has strictly followed the methodology and analysis of the M-R [Mehrabian and
Russell, (1974)] model as proposed by Donovan and Rossiter (1982).’ Donovan et
al. (1994) remarked that in its modified form, where the Dominance dimension is
taken out, that the Mehrabian and Russell (1974) model is useful for the study of
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store behaviour. From their research on store atmosphere, Donovan et al. (1994)
found support for the second hypothesis but not for the first hypothesis.
Donovan et al. (1994) and Vilnai-Yavets and Gilboa (2010) found that approach
behaviours increased linearly as environments were experienced as being more
pleasant; this concurs with the second hypothesis. Donovan et al. (1994, p. 289) also
noted that ‘Arousal was not significant in pleasant environments’. This did not
replicate the Donovan and Rossiter’s (1982) study. This is interesting and indicated
further research was essential because Donovan and Rossiter’s (1982) study found
support for the first and not the second hypothesis. However both studies, Donovan
and Rossiter (1982) and Donovan et al. (1994), stressed the importance of Pleasure
and focused on the ‘bi-directional’ effect of Pleasure and Arousal. Vilnai-Yavets and
Gilboa (2010) focussed their research on cleanliness and Pleasure and did not
examine Arousal at all.
Kenhove and Desrumaux (1997) examined Mehrabian and Russell (1974) model and
compared their results with Donovan and Rossiter (1982) and Donovan et al. (1994).
Overall their results supported previous research that the Organism-Response part of
the Mehrabian and Russell (1974) model is useful in a retail setting. In supporting
previous research and adding to it, Kenhove and Desrumaux (1997, p. 364) stressed
that ‘both Pleasure and Arousal induced by the store environment are strong
predictors of behavioural intentions.’ Donovan and Rossiter (1982) and Donovan et
al. (1994) had only stressed the importance of Pleasure. Tai and Fung (1997) also
used the Mehrabian and Russell (1974) model to research in-store buying behaviour.
Their results reinforced conclusions made by Donovan and Rossiter (1982),
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Donovan et al. (1994) and Kenhove and Desrumaux (1997) findings that supported
the model. Tai and Fung (1997, p. 331) noted that ‘the interaction between Pleasure
and Arousal is partly confirmed by the study’. They supported Mehrabian and
Russell’s (1974) first and second hypothesis.
Consistent with previous research, Mattila and Wirtz (2001) and Morrison et al.
(2011) found that adding pleasant environmental cues can enhance a customer’s
shopping experience. They used the Mehrabian and Russell (1974) model in their
methodology. Mattila and Wirtz (2001) found that when ambient scent and music are
congruent with each other in terms of their arousing qualities, customers rate the
environment significantly more positively. They also noted that customers have
impulsive behaviour, higher levels of approach and experience enhanced satisfaction
then if the variables are at odds with each other. Similarly, Morrison et al. (2011, p.
562) found that ‘arousal induced by music and aroma results in increased pleasure
levels, which in turn positively influence shopper behaviors, including time and
money spend, approach behavior, and satisfaction with the shopping experience’.
This concured with Mehrabian and Russell (1974) second hypothesis.
Over the years, not everyone agreed that the model was useful in store environment
research. As much as Kenhove and Desrumaux (1997) supported the model, they
also criticised and contradicted it. They noted that their study found results that did
not support the hypothesis of ‘bi-directionality’ between Pleasure and Arousal.
Kenhove and Desrumaux (1997) and Dubé et al. (1995) both contradicted Mehrabian
and Russell (1974) second hypothesis. Kenhove and Desrumaux (1997, p. 363)
indicated that ‘an attempt to dampen Arousal in an unpleasant store environment will
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create more avoidance behaviour intentions’. Dubé et al. (1995, p. 314) noted that
‘music induced pleasure had a stronger positive impact under low and high arousal
than under moderate arousal and, arousal had stronger effects under low and high
pleasure, compared to moderate pleasure.’ Their results showed that high Pleasure
music enhances the desire to affiliate at the two extremes of the Arousal dimension,
this disagred with Mehrabian and Russell’s (1974) second hypothesis. Dubé et al.
(1995) noted that the behaviour could be due to the fact that in a commercial setting
customers will approach service staff in order to reduce their anxiety.
Dubé et al. (1995) also contradicted Mehrabian and Russell’s (1974) third
hypothesis. The third hypothesis states that the relationship of Arousal with
approach-avoidance behaviours should be an inverted U-shape, with people being
more responsive at middle levels of arousal, as per figure 2.4. Amato and McInnes
(1983, p. 119) supported Mehrabian and Russell’s (1974) third hypothesis by
indicating that ‘arousal and information-rate were curvilinearly related to affiliative
behaviour’. They found that the highest level of approach responsiveness were in
environments of medium Arousal (Amato and McInnes, 1983). See point marked X
on figure 2.4. In contradicting Mehrabian and Russell (1974), Dubé et al. (1995, p.
315) found that it was a ‘U-shaped relationship that emerged between Arousal and
desire to affiliate under high-pleasure background music’, as per figure 2.5.
However, Dubé et al. (1995) agreed with Mehrabian and Russell’s (1974) model that
higher desire to affiliate is associated with increasing levels of Arousal.
Many authors, as previously cited, have indicated that further research is needed on
the Mehrabian and Russell’s (1974) framework. Authors have indicated that in some
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environments the Mehrabian and Russell’s (1974) model is useful and in other
environments it is not. As can be seen from the critique of the hypothesis, there has
been some debate of the appropriateness of the framework in different situations.
Wirtz et al. (2000) suggested a new variable called ‘Target-Arousal level’ could be
very important in understanding the role the model plays and in which situations it is
useful. Wirtz et al. (2000) and Mattilla and Wirtz (2006) supported part of
Mehrabian and Russell’s (1974) framework but only in certain ‘High Target-
Arousal’ situations. Over the years, authors have agreed and disagreed with
Mehrabian and Russell’s (1974) hypotheses but had not specified if the situation had
been ‘High’ or ‘Low’ target-arousal.
Desire to X
Affiliate
or
Approach
Low Arousal High
Figure 2.4 The Inverted U Shaped Graph

Source Adapted from Mehrabian and Russell (1974)
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Desire to
Affiliate
or
Approach
Low Arousal High
Figure 2.5 The U Shaped Graph

Source: Adopted from Dubé et al. (1995)
2.7 Target-Arousal
Wirtz et al. (2000) suggested that Target-arousal is a beneficial factor in assessing
satisfaction. Target-Arousal refers to the level of Arousal a customer seeks in a
service environment prior to actual service consumption (Mattila and Wirtz, 2006).
An example of a likely High Target-Arousal would be customers going to a
nightclub or amusement park, while customers going to a bank are more likely to
have Low Target-Arousal (Wirtz et al., 2000, Mattila and Wirtz, 2006).
Wirtz et al. (2000, p. 347) results indicated ‘that the traditional Pleasure-Arousal
interaction effect might be limited to High Target-Arousal situations.’ Wirtz et al.
(2000, p. 360) found that ‘under High Target–Arousal, that is, in pleasant
(unpleasant) conditions the higher the Arousal level, the more positive (negative) the
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satisfaction evaluation’. In a High Target-Arousal situation, their findings were
consistent with Mehrabian and Russell’s (1974) first hypothesis. However, Wirtz et
al. (2000, p. 360) also contradicted the Mehrabian and Russell’s (1974) model
indicating that ‘in the Low Target-Arousal conditions, subjects failed to exhibit
higher levels of satisfaction in pleasant yet high Arousal environments’. They
introduced the concept of Target-Arousal to understand the interplay between
Arousal and Pleasure in a service satisfaction context.
Mattilla and Wirtz (2006) further focused on the element of ‘Target-Arousal’. Their
research was an extension on research from Wirtz et al. (2000). In their research
Mattila and Wirtz (2006) manipulated High and Low Target-Arousal levels through
the use of a short narrative. Mattilla and Wirtz (2006, p. 238) indicated that their
results were similar to Wirtz et al. (2000), in that ‘under pleasurable conditions,
increasing Arousal levels enhanced satisfaction when customers had High Target-
Arousal, while having the opposite effects when customers had Low Target-
Arousal’. In the High Target-Arousal situation this concured with Mehrabian and
Russell’s (1974) first hypothesis. Mattilla and Wirtz (2006) research further went on
to demonstrate that an attractive store might be perceived as unpleasant or pleasant
depending on whether the environment matches the customers desired Target-
Arousal level.
In other research, Chebat and Michon (2003, p. 537) indicated that an alternative
approach to evaluating store environments might be more beneficial as ‘the
approach-avoidance model strongly stressed the emotional effects of the
environment to the detriment of the study of the meaning of the environment’.
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Chebat and Michon (2003) argued for the use of Lazarus (1991) theory as an
alternative to Mehrabian and Russell’s (1974) model. Interestingly, Tai and Fung
(1997) indicated that the Mehrabian and Russell (1974) model is not as simplistic as
it looks but rather the environmental psychological components may affect each
other in both directions. Lazarus’s (1991) theory suggested that the components
affect each other in both directions and will be considered next.
2.8 Lazarus (1991) Cognition Theory of Emotion Model
Chebat and Michon (2003) compared two models in order to test the effect of
ambient odours in a shopping centre environment. They used an adaptation of the
Mehrabian and Russell model as used by Donovan and Rossiter (1982) and Lazurus’
(1991) cognitive theory of emotion. Lazarus’ (1991) cognitive theory of emotion had
not been used before within the literature of store environments. Chebat and Michon
(2003) dealt with two completely opposite schools of thought within their research.
Mehrabian and Russell (1974) took the emotion-cognition approach and Lazarus
(1991) took the cognition-emotion school of thought. Lin (2004) indicated that over
the years researchers have argued for both sides; on the one hand that cognitive state
precedes emotional states and on the other hand that emotional states precede
cognitive states. Chebat and Michon (2003, p. 531) indicated that ‘there is a definite
need to further understand the interplay and the hierarchy of cognition and emotion
in the study of environmental cues’.
Lazarus’ (1991) cognitive theory stated that cognitive states precede emotional states
during the process of evaluation or appraisal (Lin, 2004). According to Chebat and
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Michon (2003, p. 532) the cognitive theory of emotion ‘presumes that the causal role
of cognition as a necessary but not sufficient condition to elicit emotions’. Lazarus
(1991) suggestd that while cognition does not automatically lead to emotion,
emotion cannot occur without cognition. The theory stated that reason is part of
emotion. Bigné et al. (2005, p. 835) noted that the theory suggested ‘external and
internal cues must be appraised in terms of one’s experience and goals’. The
appraisal of the relationship between the person and the environment is necessary,
because without a personal appraisal there will be no emotion; when an appraisal is
made, an emotion of some kind is unavoidable (Lazarus 1991). Lazarus (1991) also
indicated that emotion may make customers aware of environmental factors that may
be significant. Lazarus’s (1991) theory focused attention on the relationship between,
cognition, emotion and behaviour.
Though Tai and Fung (1997) do not specifically suggest Lazarus (1991) cognitive
theory of emotion as an alternative, their findings indicated that it may play an
important role. They suggested that the three components, environmental stimuli,
emotional states and approach-avoidance responses, affected each other. Lazarus
(1991) does not view emotions as discrete isolated units that can exclusively be
defined by actions or reactions, but rather they are connected to our environmental
conditions and to our personal states of well-being. Lazarus (1991) theory suggested
a link exists in both directions between the components. He indicated that the
relationship between emotion and cognition is bi-directional, in that emotion
influences cognition and cognition brings forth emotion. It is clear from previous
research that environmental stimuli affect shoppers’ behaviour and their affective
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state but further research needs to be conducted on how the three components affect
each other (Tai and Fung, 1997).
Chebat and Michon (2003) found support for Lazarus (1991) cognitive theory of
emotion. This theory contradicted the Mehrabian and Russell (1974) approach-
avoidance model. Chebat and Michon (2003, p. 537) indicated that within this study
it was found ‘that odours do impact significantly on perceptions of both product
quality and shopping environment’. They also noted Pleasure and Arousal contribute
very little to spending, but do note that the contribution is of significance. Overall
Chebat and Michon (2003) indicated that within the literature of service
environments the Approach-Avoidance model has strongly stressed the emotional
effects, however they also note that the model may have been overstated within the
literature. Bigné et al. (2005) also tested Mehrabian and Russell’s (1974) model and
Lazarus’ cognitive theory. Their research was similar to Chebat and Michon (2003)
and they hoped to fill the gap between emotions and cognition. Bigné et al. (2005)
indicated that the Pleasure dimension positively influences loyalty behaviour. This
supports Mehrabian and Russell’s (1974) model. However, overall Bigné et al.
(2005) found that Lazarus (1991) cognitive theory of emotion better explains the
effect of Pleasure on satisfaction and loyalty.
2.9 Conclusion
Overall through the past four decades there have been a number of difficulties in
assessing Mehrabian and Russell (1974) model and hypotheses. Firstly, it is
important to note that customers seek pleasant environments and due to lack of
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patronage in unpleasant environments it can be difficult to adequately assess the
hypotheses (Donovan and Rossiter 1982, Donovan et al 1994). Secondly, within the
literature there has been little support to recognise the role of Dominance (Foxall and
Greenley 1999, Newman 2007). As mentioned Foxall and Greenley (1999, p. 150)
noted that ‘the failure to find a role for Dominance might have been predictable
given the narrow range of customer settings’ used in past research. These are two
aspects that have been difficult to confirm due to lack of appropriate environmental
settings being used in research.
Thirdly, according to the Mehrabian and Russell (1974) model Pleasure and Arousal
are correlated dimensions. Kenhove and Desrumaux (1997) reflected that Pleasure
and Arousal are correlated yet independent dimensions and failure to distinguish the
two factors can result in measurement and fit errors. In their study Donovan et al.
(1994) indicated a possible failure to construct an unambiguous arousal factor.
Mattilla and Wirtz (2006) suggested that Target-Arousal is an unexplored concept
that could be beneficial in assessing Approach-Avoidance behaviours.
Finally, Chebat and Michon (2003) suggested an alternative model for assessing
emotions, the Lazurus (1991) model. Nevertheless, Donovan and Rossiter (1982),
Donovan et al (1994), Foxall and Greenley (1999) and Mattila and Wirtz (2006)
Newman et al. (2007), studies all indicated that the Mehrabian and Russell (1974)
model is a beneficial basis for exploring the ‘bi-directional’ relationship and that
further research is imperative. This research follows the call for further analysis of
the Mehrabian and Russell (1974) model.
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The next chapter introduces the environmental stimuli (S) that have been specifically
used in the services literature. Bitner (1992) developed a framework called the
servicescape to examine the environmental stimuli in the services literature.
Hightower et al. (2002) indicated that Mehrabian and Russell (1974) model is an
influencing part of the Servicescape literature. Bitner’s (1992) Servicescape model
shared similarities to the Mehrabian and Russell (1974) model. In her model, Bitner
(1992) defined the physical environment as the man made built environment or
‘Servicescape’. Though there are similarities between the models, Bitner’s (1992)
framework is unique in its extent of synthesis; the framework incorporates both
customers and employees in their interactions. Compared with Mehrabian and
Russell’s (1974) model, which only focuses on emotional responses, the
Servicescape model focuses on many aspects of the environment, the physical
environment, holistic environment, internal response moderators, internal responses
and behaviours.
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3 CHAPTER 3 Servicescape
What makes consumers buy where they do? Not prices, not quality, not services, but
the personality of the retail store
Martineau (1958, p. 47)
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3.1 Introduction
Millions of dollars are spent by retailers each year on special lighting, background
music, carpeting and fixtures, all with the hope of creating an atmosphere that is
conducive to retail success’ (Gulus and Bloch, 1995, p. 95).
This chapter provides an in-depth review on Bitner’s (1992) Servicescape model. In
doing so each of Bitner’s three dimensions of Ambience, Space & Function and
Signs, Symbols & Artefacts are examined. As discussed in chapter two, Mehrabian
and Russell (1974) model has clearly influenced Bitner’s (1992) servicescape model.
Bitner’s (1992) model identifies a connection between the servicescape (S), internal
responses (O) and a customer’s behaviour (R). Though Bitner’s (1992) model was
initially designed for bricks and mortar stores its influence has also been recognised
within online servicescapes (Hopkins et al., 2009, Harris and Goode, 2010). A
social-servicescape model has also been developed and this will be discussed at the
end of the chapter
3.2 Bitner’s (1992) Servicescape
Tombs and McColl-Kennedy (2003, p. 450) indicated that ‘one of the most widely
cited typologies of the service encounter, and its effects on those within in it, is
Bitner’s servicescapes model’. See figure 3.1 for depiction of the model. Retailers
have also acknowledged the importance of the servicescape as a tool for market
differentiation and formulating marketing programs (Levy and Weitz, 2007, Orth et
al., 2012). The concept of designing attractive artificial environments is not a new
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discovery but goes back to ancient times (Kotler, 1973, Ezeh and Harris, 2007). It
was Booms and Bitner (1981, p. 36) that defined the servicescape as ‘the
environment in which the service is assembled and in which seller and customer
interact combined with tangible commodities that facilitate performance or
communication of the service’. Bitner (1992, p. 67) reiterated and indicated that
‘through careful and creative management of the servicescape, firms may be able to
contribute to the achievement of both external marketing goals and internal
organisational goals’.
Since the servicescape was formed there has been widespread use of the model in
assessing, evaluating and understanding store environments and their atmospheres
(Wakefield and Blodgett, 1994, Aubert-Gamet, 1996, Turley and Milliman, 2000,
Hightower et al., 2002, Tombs and McColl-Kennedy, 2003, Kim and Moon, 2009,
Lin and Worthley, 2012). Oakes (2000) developed a framework based on Bitner’s
framework but the framework focussed solely on music. The framework was called
the ‘Musicscape model’ (Oakes, 2000). Similarly Bone and Ellen (1999) developed a
framework on ‘olfaction’. The framework was called the olfaction model. Both of
these factors are part of Bitner’s framework and will be discussed in detail in section
4.1 on Music and 4.4 on Olfaction.
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Physical Internal Internal
Environmental Holistic
Environment Response Response Behaviour
Dimension
Moderators
Cognitive Emotional Physiological Individual Behaviour
Ambient  Beliefs Approach
Conditions  Categorisation  Mood  Pain  Affiliation
 Temperature  Symbolic 
 Attitude
Comfort  Exploration
 Air Quality 
Employee Meaning Movement  Stay longer
 Noise 
Response Physical Fit  Commitment
 Music Moderators  Carry out plan
 Odour
Avoid
 Etc.
 (Opposite of Approach)
Space/Function
Employee
 Layout
 Equipment Response
Perceived
 Furnishings Servicescape Social interactions
 Etc.
Signs,Symbols&  (Between and among
Artefacts customers and employees)
 Signage
Customer Customer
 Personal
Response Response Individual Behaviour
Artefacts
Moderators Approach
 Style of Décor
 Etc.  Affiliation
Cognitive Emotional Physiological  Exploration
 Beliefs  Stay longer
 Pain  Commitment
 Categorisation  Mood
 Comfort  Carry out plan
Figure 3.1 The Servicescape Model  Symbolic  Attitude
Source: Bitner (1992, p. 60) Meaning  Movement Avoid
 Physical Fit  (Opposite of Approach)
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Grace and O’ Cass (2004, p. 451) noted that the service environment is ‘complex as it
involves a combination of processes, people and facilities’. Bitner (1992, p. 57) noted
that ‘because the service generally is produced and consumed simultaneously, the
customer is ‘the factory’, often experiencing the total service within the firms’ physical
facility.’ The customer can not touch, see, smell or feel a service in the same manner as
a tangible good (Shostack, 1977, Bitner and Zeithaml, 2003). The intangibility of a
service indicates that the service cannot be physically felt in the same manner as a
product.
Hoffman and Turley (2002) proposed that much can be gained by examining the role of
the servicescape because of the intangible nature of services. Shostack (1977) suggested
that the more intangible a service is, the greater is the need to provide tangible, physical
evidence. The physical evidence is assumed to be important because in the absence of a
material product customers use tangible cues to assess the quality of service providers
(Aubert-Gamet, 1996, Aubert-Gamet and Cova, 1999, Reimer and Kuehn, 2005, Ha and
Jang, 2012). Lin (2004, p. 164) agrees with Aubert-Gamet and Cova (1999) and further
suggests that ‘servicescapes are not only important component of a customer’s
impression formations, but also an important source of evidence in the overall
evaluation of the service itself’. Similar to Mehrabian and Russell’s (1974) model,
Bitner’s (1992) model suggests that the environmental stimuli, the (S) component
affects the (O) component which in turn affects the (R) component.
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Bitner (1992) concentrates on the (S) component and indicates that there are three
physical environmental dimensions that can provide evidence to the customer, Ambient
conditions, Spatial & Function and Signs, Symbols & Artefacts. Shostack (1977)
indicated that environmental stimuli are controllable, thus suggesting that Bitner’s
(1992) three dimensions are controllable. According to Hoffman and Turley (2002, p.
35), ‘servicescapes or atmospherics have the means of providing the ‘evidence’ that
assists customers in making subjective evaluations of service products’. Before the
servicescape had been defined, Kotler (1973) coined the term ‘atmospherics’ to describe
the intentional control and manipulation of environmental cues in the service
environment.
Kotler (1973, p. 50) identifies atmospherics as ‘the effort to design buying environments
to produce specific emotional effects in the buyer that enhances his purchase
probability’. Milliman (1986) noted that atmospherics is a term used to describe the
experience that is ‘felt’ but not always seen. McKinney (2004, p. 271) agreed and also
noted that ‘atmospheric variables are used to create differences in retail environments to
maintain a competitive advantage’. Wright and Noble (1999) indicated that by allocating
active attention to the understanding of atmosphere retailers can improve sales. In
general ‘having atmosphere’, a term often used by customers of services, refers to a
service environment having a ‘good’ or ‘enjoyable’ environment. Kotler (1973) noted
that the physical surroundings, the servicescape can evoke pleasant feelings for the
customer. Atmospherics can evoke a range of emotional reaction and also influence the
actual nature of the customer-employee interaction (Mehrabian and Russell, 1974, Hui
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et al., 1997, Foxall and Greanley, 1999, Machleit and Eroglu, 2000, Brown and Lam,
2008, Ha and Jang, 2012).
Many authors refer to Bitner’s (1992) framework to describe the dimensions related to
the servicescape. Wakefield and Blodgett (1994, p. 47) make reference to ‘two
important aspects of the servicescape ‘spatial layout and functionality’, and ‘the
elements related to aesthetic appeal’. In further research Wakefield and Blodgett (1996,
p .47) concur with Bitner (1992) and suggest that she ‘identifies three primary
dimensions of the servicescape that influence customers’ holistic perceptions of the
servicescape’. Lam (2001, p. 190) indicated that the ‘store environments, the physical
surrounding of a store, is made up of many elements, including music, lighting, layout,
directional signage and human elements, and can be divided into external environmental
and internal environment[that is the external and interior of a store]’.
Hoffman and Turley (2002, p. 35) concurred with Lam (2001) and established that in
broad terms the servicescape consist of three components, ‘facility exterior, facility
interior and other tangibles’. Each of Hoffman and Turley’s (2002) components coincide
with Bitner’s (1992) three dimensions. The conceptual framework, illustrates the
complex mix of environmental stimuli that can influence the internal response and
external response of both employees and customers (Bonnin, 2006). Bitner (1992, p. 59)
indicates that the three dimensions influence important customer and employee
behaviours, ‘a variety of objective environmental factors are perceived by both
customers and employees and both groups may respond cognitively, emotionally, and
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physiologically to the environment’. Bitner (1992) argues that the service setting can
affect customers’ emotional, cognitive, and physiological responses, which in turn
influence their evaluations and behaviours. Aubert-Gamet (1996, p. 27) concurs and
indicates that ‘the physical stimuli of the environment affect the emotional states of
individuals, and therefore their behaviour.’
Some have argued for an extension of Bitner’s (1992) three dimensions to include a
‘social’ dimension (Tombs and McColl-Kennedy, 2003, Hightower, 2010, Nguyen et
al., 2012). However Bitner (1992) herself focussed on the physical aspects of the
environment. She (1992, p.58) indicated that ‘a clear implication of the model presented
here is that the physical setting can aid or hinder the accomplishment of both internal
organizational goals and external marketing goals’. The three dimensions of Bitner’s
(1992) framework will be examined in detail before discussing the social aspect of the
servicescape.
Ambient condition is the first dimension in Bitner’s (1992) framework. The ambient
conditions are background features such as temperature, air quality, noise, music,
lighting and odour (Bitner, 1992). Aubert-Gamet (1996, p. 29) indicated that ‘ambient
factors are background conditions that exist below the level of immediate awareness and
typically draw attention only when they are absent or unpleasant, for example,
temperature and noise levels’. Tombs and McColl-Kennedy (2003) suggested that the
ambient factors parallel Kotler’s (1973) atmospherics factors. Kotler (1973) indicated
that the five main human sensory channels of sight, sound, scent, taste and touch
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contribute to the atmosphere of the service. Kotler (1973) and Bitner (1992) are both
consistent in identifying that the five senses can affect the customer however neither
author puts emphasis on the factor of taste. Kotler (1973, p. 51) indicates ‘an
atmosphere is seen, heard, smelled, and felt, but not tasted. At the same time, certain
artefacts in an atmosphere can activate remembered tastes’.
The service environment is specially designed in its layout for both the employee and
the customer. Space/function or as sometimes refered to as spatial layout is the second
dimension of Bitner’s (1992) model. According to Tombs and McColl-Kennedy (2003,
p. 450) ‘spatial layout and functionality are considered important factors as the spatial
relationship of items within the servicescape and their ease of use help facilitate the
provision of the service’. Bitner (1992, p. 66) indicated that ‘special layout refers to the
ways in which machinery, equipment, and furnishings are arranged, the size and shape
of those items. Functionality refers to the ability of the same items to facilitate
performance and the accomplishment of goals’. Lin (2004, p. 168) concurred and noted
that ‘the furnishings in a servicescape link the space with its occupants and convey the
personality of the servicescape through form, line,[and] colour.’
In a shopping environment layout represents the task environment (Iyer, 1989).
Wakefield and Blodgett (1996, p. 47) suggested that ‘an effective layout will provide for
ease of entry and exist, and will make ancillary service areas such as concessions,
restrooms and souvenir stands more accessible’. Lin (2004, p. 168) concurred with this
and further suggested that ‘the furniture placement may convey a sense of enclosure,
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define spatial movement, function as walls, and communicate visible or invisible
boundaries’.
The third dimension ties in closely with layout and function. Signs, symbols and
artefacts is Bitner’s (1992) third dimension. The third dimension will contain tangibles
which can be found on both the exterior and the interior of the service encounter. The
dimension refers to the labels, brand names, name of company, name of department
store, directions of exit and entry, as well as communicating rules of behaviour and
implicit meanings (Bitner, 1992). The exterior tangible variables can be storefront,
marquee, entrance, display windows and the interior tangible variables can include,
flooring, wall textures and overall cleanliness (Turley and Milliman, 2000). Tombs and
McColl-Kennedy (2003) indicated that ‘signs, symbols and artefacts are features
designed into the environment, which provide cues about the service provider to the
users of the service’. Bitner (1992, p. 66) agreed and indicated that ‘signage can play an
important part in communicating firms image’.
As noted by Shostack (1977) and Wakefield and Blodgett (1996), the dimensions of the
environmental stimuli are controllable and help in communicating an atmosphere to the
customers. ‘The common linkage across all these stimuli is that their presence in a
consumption setting is purposively planned and they remain under managerial control’
(Rosenbaum and Massiah, 2011, p. 475). Within the literature there is growing
recognition that store interiors and exteriors are controllable and can be designed in such
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a way to create specific feelings and attract customers (Kotler, 1973, Kearney et al.,
2007).
3.3 Servicescape Elements
As mentioned, the servicescape, which has also been referred to as ‘environmental
stimuli’ (Mehrabian and Russell, 1974) or ‘atmosphere’ (Kotler, 1973), consists of many
tangible and intangible elements. Milliman (1986, p. 286) indicated that the atmosphere
consists of elements such as ‘brightness, size, shape, volume, pitch, scent, freshness,
softness, smoothness, and temperature’. These elements can be found in Bitner’s (1992)
servicescape factors or sense modalities of music, colour, lighting, layout or olfaction.
Lawless (1991, p. 361) noted ‘that any sense modality provides information to an
organism so that environmental events may be perceived and acted upon’. Herrington
and Capella (1996, p. 26) concurred and indicated that ‘within service environments
customers can be exposed to numerous stimuli, all of which potentially affect how
customers act, what they buy, and their satisfaction with the service experience’. Yalch
and Spangenberg (1990) suggested that different combinations of the servicescape
elements can help create different atmospheres. Mattila and Wirtz (2001, p. 287) pointed
out that ‘designing servicescapes is often considered an art’.
For example, Yalch and Spangenberg (1990) illustrated that restaurants may use bright
lighting and fast tempo music to encourage rapid turnover when demand for tables is
high but when demand is low they will use dim lighting and slow music to encourage
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customers to linger and consume more. Mattila and Wirtz (2001, p. 274) concurred and
noted that ‘matching ambient stimuli might lead to higher evaluations of the store
environment, more positive behavioural responses and higher satisfaction level than
mismatching’. Spangenberg et al. (2005, p. 1583) point out that ‘although environmental
stimuli have been found to influence shopping behaviour, empirical knowledge of how
these variables interact to affect shopper perceptions and actions is lacking’. Music is
the first of the servicescape variables that will be discussed, followed by colour,
olfaction, lighting and then layout.
3.3.1 Music
From the large number of environmental stimuli, background music has been identified
as one of the most influential elements (Andersson et al. 2012). According to Turley and
Milliman (2000, p. 195) ‘music is the most commonly studied general interior cue’.
Within everyday situations the effects that music can have on our mood is apparent.
Tansik and Routhieaux (1999, p. 70) note that ‘there is substantial literature that predicts
that music can have an effect on people’s anxiety or mood state’. ‘Music has been
known for centuries to have a powerful effect on human response’ (Sweeney and Wyber
2002, p. 51). Yalch and Spangenberg (1990, p. 33) recognised that ‘music clearly can
alter one’s mood, as is evidenced by its use in movies to augment various scenes’.
Listening to favourite upbeat songs in the morning can help lift moods, the opposite can
also hold true for songs that are perceived as sad. Bruner (1990, p. 94) noted ‘that music
has long been considered an efficient and effective means for triggering moods’.
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Sweeney and Wyber (2002, p. 51) concurred and indicated that ‘music is particularly
known for its effectiveness in triggering moods’. Playing music is like adding a positive
feature to the service environment and the outcome is a more positive emotional
evaluation of the service environment (Baker et al., 1992).
Milliman (1982) research was a starting point for the investigation into music and its
effect on behaviour. Since then music has found to be an important atmospheric variable
in creating in-store experiences for the customer (Morrison and Beverland, 2003, Lin,
2010, Andersson et al. 2012). Spangenberg et al. (2005) indicated that it is an
environmental cue which has been demonstrated to affect consumer behaviour. Dubé
and Morin (2001, p. 108) point out that ‘in the retail industry, a significant effort has
been made over the last decade in purchasing background music inclined to please target
clientele and to create the appropriate atmosphere’. Yalch and Spangenberg (1993)
suggested that music is a particularly appealing atmospheric element because it is
relatively inexpensive, easily changed and has predictable appeals to customers based on
their age, gender and life styles.
Milliman (1982) indicated that it was possible to influence behaviour with music.
Mattila and Wirtz (2001, p. 276) noted that ‘music is capable of evoking complex
affective and behavioural responses in consumers’. Music can improve the evaluation of
the in-store environment; this then can have a positive spin off for how consumers
approach the store environment (Hui et al., 1997). Spangenberg et al. (2005) concur and
suggest that ‘musical stimuli are a powerful means of influencing consumers' affective
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responses in retail environments, thereby influencing evaluations of, and behaviours
within retail settings’. Tanisk and Routhieaux (1999, p. 70) also reflect upon the effects
of music in medical service environments, ‘soft or calm music has an especially positive
effect in reducing stress and anxiety in a variety of environments, including medical
situations.
Kotler (1973) suggested that the notion that background music can influence behaviour
is derived from atmospherics. According to Yalch and Spangenberg (1990, p. 32)
‘music is one of the most frequently used atmospheric factors to enhance the delivery of
services to customers’. Chebat et al. (2001, p. 115) suggested that ‘retailers often use
background music in order to enhance the atmosphere of their stores’. Combined with
other environmental stimuli music can establish a certain ambience or atmosphere
(Milliman, 1986, Yalch and Spangenberg, 1990, 2000, Oakes, 2000, Chebat et al., 2001,
Dubé and Morin, 2001, Lin, 2010, Morrison et al. 2011). Morrison and Beverland
(2003, p. 78) note that ‘classical music used in conjunction with soft lighting and
multiple salespeople helps create a prestigious image in a retail setting’.
Many authors note that music must ‘fit’ in with its environment in order to create a
desired atmosphere (Chebat et al., 2001, Dubé and Morin, 2001, Morrison and
Beverland, 2003, Beverland et al., 2006). Chebat et al. (2001) noted that ‘music fit’ was
as an important concept, ‘music fit’ refers to the degree that the music suits the
environment. Morrison and Beverland (2003) indicate that ‘music fit’ is a complex and
evolving concept. Baker et al. (2002) agreed and noted that ‘fit’ concerns the
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congruency between music and other atmospheric in store variables, such as colour and
lighting. Beverland et al. (2006) indicated that ‘fit’ between a stores atmospherics and a
stores image is crucial. Chebat et al. (2001, p. 122) concurred that ‘pleasant music is not
sufficient to help salespersons; it may even hinder their persuasive efforts if the music is
considered as not fitting to the sales encounter’. Music needs to be used strategically in
an effort to ensure ‘fit’ for the stores image (Dubé and Morin, 2001, Lin, 2010). Yalch
and Spangenberg’s (1993) research showed that consumers may spend more money and
buy more when the music closely fits or matches the musical tastes of the shoppers.
Research has indicated that certain music types are more appropriate for certain stores
then others and a mis-match of music with store image can have negative affects
(Machleit and Eroglu, 2000, Yalch and Spangenberg, 2000). Morrison and Beverland
(2003, p. 78) indicated that a ‘mismatch between store type and experiential strategy,
including the use of music, could have negative affects on consumers’. From their study
Morrison and Beverland (2003, p. 82) identified the ‘importance of a multilayered fit
between in-store music, the stores strategic approach, and its environment’
Kellaris and Kent (1991) noted that music is not a one-dimensional stimulus but rather a
multidimensional or multilayered stimulus. Bruner (1990, p. 94) agreed and indicated
that ‘music is not simply a generic sonic mass, but rather a complex chemistry of
controllable elements’. Oakes (2000) developed a framework to identify these
controllable elements. Oakes (2000) named the framework the ‘Musicscape’ model. The
model identifies the effects of music on customer feeling states. See figure 3.2.
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Independent Valence Internal Behavioural
Variables Moderators responses Outcomes
Compositional Demographics Cognitive Approach

Behaviour
Tempo Age Expectations
Consumption
Speed
Harmony Gender Perceived
Duration
Stay
Social Class Duration
Volume
Purchase
Emotional Behaviour
Genre Respondent Elicited Moods
Classical Familiarity
Popular
Jazz
Figure 3.2 Musicscape Model

Source: Oakes (2000, p. 540)
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The framework is similar to Bitner’s (1992) servicescape model. Oakes (2000)
model looks at just one of Bitner’s (1992) ambient conditions, music and its many
components that affect approach-avoidance behaviour.
Emotional States
Intended Approach- Avoidance
 Pleasure Behaviours
 Arousal  Enjoyment of shopping in
store
 Time spent browsing and
Music exploring store
 Willingness to affiliate with
people in the store
 Tendency to spend more
Cognitive processing than anticipated
 Service quality
perceptions  Likelihood of returning to
 Merchandise the store
quality perceptions  Willingness to buy
 Likelihood of
recommending
Figure 3.3 Music, Cognitive Processing, Emotional States and Approach- store
Avoidance Behaviours
Source: Sweeney and Wyber (2002, p. 52)
Similarly to Oakes (2000), Sweeney and Wyber (2002) developed a music model
which can be viewed as a subset of Bitner’s (1992) servicescape model. (See figure
3.3). It is also an extension of the Mehrabian and Russell (1974) model. Sweeney
and Wyber (2002, p. 55) note that ‘the model examines the manner in which music
affects consumers responses or reactions and subsequently intended behaviours in a
retailing context’. However Sweeney and Wyber’s (2002) model does not describe in
detail the many elements of music itself, which can be seen in Oakes (2000) model.
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Bitner (1992) indicated that music is one of the key ambient conditions of the
servicescape. Oakes (2000) model describes in detail the complex elements of music
itself. The model looks at the independent variables and valence moderators that
affect the internal response which in turn affects the behavioural outcomes (Oakes
2000). Similarly to Bitner’s (1992) model, Oakes (2000) model provides a visual
framework and identifies the elements and their relationships that other studies have
concentrated on. For example Yalch and Spangenberg (2000) researched music
familiarity, Herrington and Capella (1994, 1996) researched how music effects the
service environment, Kellaris and Kent (1992) researched time estimations and
Bruner (1990) researched music, moods and marketing. The framework also
highlights elements that have not been concentrated on such as harmony or social
class.
It is imperative in the retail sector that managers are aware of the music’s influence
and its effects on customer’s approach-avoidance behaviours. It is essential due to
music being a controllable variable (Shostack, 1977). Milliman (1986) concurred and
noted that each of the servicescape variables are controllable but some variables,
such as music, are considered more controllable then others. Music can range from
‘from loud to soft, fast to slow, vocal to instrumental, heavy rock to light rock and
classical to contemporary urban’ (Milliman 1986, p. 286). Kellaris and Kent (1992,
p. 368) noted that ‘variations in musical modality can sculpt the stimulus
environment and influence changes in listeners’ feeling states’. Herrington and
Capella (1996, p. 27) agreed and indicated that ‘shoppers behaviour tends to differ
according to the type of music played’.
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Oakes (2000) suggested that different aspects of music such as tempo, volume, and
familiarity can shape internal responses. Herrington and Capella (1996, p. 28)
concurred and suggested that there is ‘some evidence to suggest that tempo, volume
and other structural characteristics of background music influence behaviour’. Oakes
(2000) indicated that tempo is most often researched due to its quantifiable
composition. The musical factor of tempo will be looked at first followed by volume
and pitch, demographics and familiarity.
3.3.1.1 Tempo
According to Bruner (1990, p. 102) ‘tempo is the speed or rate at which a rhythm
progresses’. Oakes (2000) agrees and notes that music tempo is the most commonly
researched area of music due to its relative ease of comparability. ‘Tempo is an
important time-related variable since it controls the pace or ‘spacing’ of sounds’
(Kellaris and Kent 1991, p. 243). Through the use of a metronome, the number of
beats per minute (BPM), the tempo, can be monitored or varied for the music (Oakes
2000).Within the literature slow tempo and fast tempo have been given different
BPMs. In general the guideline has been set at around 72 BPM or less for slow
tempo and 92 BPMs or more for fast tempo music (Milliman, 1982, 1986,
Herrington and Capella, 1994, Oakes, 2000, Sweeney and Wyber, 2002).
Herrington and Capella (1996, p. 27) noted that ‘faster tempos and higher volumes
add to the complexity of the environment, thus increasing the level of information to
be processed.’ Information processing relates to the ‘information rate’ which the
Mehrabian and Russell (1974) model uses as a means of measurement on the S
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component. As noted by Donovan and Rossiter (1982) the level of complexity can
affect the consumer’s internal response. Increasing information generally relates to
an increase in arousal which in turn may affect Approach-Avoidance behaviour
(Mehrabian and Russell 1974). Kellaris and Kent (1992) agreed and noted that music
has the ability to fill a time interval with stimulus information. From their study
Kellaris and Kent (1991, p. 246) found that tempo had a ‘positive main affect on
evaluations of music’s arousingness and on behavioural intent’. Morrison and
Beverland (2003, p. 78) concurred and noted that ‘fast paced classical and slow
popular music can induce perceptions of service quality and pleasure in people,
which along with merchandise quality can have a positive effect on approach
behaviour’.
Chebat et al. (2001, p. 117) indicated that ‘because of the ambiguous nature of
soothing music, we can hardly conclude if slow tempo enhances more cognitive
activity than fast tempo’. However, within the literature the effect of fast and slow
tempo on customer behaviour has received mixed reactions from authors. Milliman
(1982, p. 90) indicated that ‘the tempo of instrumental background music can
significantly influence both the pace of in-store traffic flow and the daily gross sales
volume purchased by customers’. On the other hand Herrington and Capella (1996,
p. 35) found that ‘the tempo and volume of the background music did not
significantly influence the shopping time or purchase amount of the sample of
shoppers’. Herrington and Capella (1996) noted that Milliman’s (1982, 1986)
research may have been inconsistent as it did not take into consideration other
musical characteristics such as musical preference, musical style, key, mode. In
order to overcome these differences Herrington and Capella (1996) used a digital
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musical sequence, which allowed them to hold, volume, key pitch and other musical
characteristics constant. Overall Kellaris and Kent (1991) noted that tempo appears
to be an important influence on responses to music.
3.3.1.2 Volume and Pitch
Kotler (1973, p. 51) indicated that the main ‘aural dimensions of an atmosphere are
volume and pitch’. Oakes (2000, p. 543) suggested that ‘background musical volume
is likely to be musical variable which is easiest to modify for mangers operating
within service environments’. Similarly to tempo, volume can easily be measured
and controlled. Within their research Herrington and Capella (1996) used a decibel
meter to measure the levels of loud and soft music. Oakes (2000) notes that within
the literature few studies have actually used a decibel meter and this can lead to
unquantifiable measure of volume.
Herrington and Capella (1996, p. 27) noted that ‘slower tempos and lower volumes
tend to make retail patrons shop or eat at a more leisurely pace and in certain
instances spend more money than faster tempos and higher volumes’. However
Harrington and Capella (1996) found that shopping time increased with customer
preference towards the background music regardless of the volume. This contrasts
with Smith and Curnow (1966) study on music that identified that loud music made
shoppers shop for shorter periods of time, however there was no decibel measure
used to quantify the measure of volume. Oakes (2000, p. 543) notes that ‘it is not
clear whether mere disliking of loud music is the critical factor producing longer
estimates, or whether the higher decibel level itself is causing the response’.
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According to Kellaris and Kent (1991, p. 243) ‘modality is an important pitch related
variable since it provides the basic framework within which pitches are organised to
form melodies and harmonies’. Oakes (2000) suggested within his framework that
harmony is an important part of the composition along with tempo and volume.
Kellaris and Kent (1992, p. 368) noted that ‘variations in musical modality can
sculpt the stimulus environment and induce changes in listeners’ feeling states.
Kellaris and Kent (1991, p. 243) suggested that ‘in general major keys tend to be
associated with positive thoughts and feelings and minor keys with negative thoughts
and feelings’. There are also atonal modalities; these are neither major nor minor
keys and each has its own aesthetic character (Kellaris and Kent, 1991).
3.3.1.3 Music Demographics
Oakes (2000, p. 540) indicates that although demographic factors have not been a
main focus in past studies, ‘their presence within the Musicscape framework
acknowledges their mediating influence’. Oakes (2000) particularly looked at age,
gender and social class as influencing variables. Yalch and Spangenberg (1993, p.
632) noted that musical preference varies according to age, they suggested that
‘teenagers usually listen to rock music’ and ‘older professional adults may prefer
classical music’. Mehrabian and Russell (1984) indicated that in general males and
females respond differently to similar environmental stimuli. In their research,
Andersson et al. (2012) found that females reacted differently in a no-music
condition compared with males. They found that the degree of approach behaviour
was moderated by gender.
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Through the use of environmental dimensions such as music stores can attract or
drive away unwanted customers. Bitner (1992) noted the use of elevator music in a
7/11 store to drive away the youthful market segment that had been detracting from
the stores image and atmosphere. Herrington and Capella (1994, pp. 51-52)
remarked on the limited apparel stores use of music and suggested that they used
‘popular contemporary background music in an effort to attract a certain segment of
the apparel-buying market (e.g. young, fashion conscious women)’. Yalch and
Spangenberg (1993, p. 632) note that ‘managers expect store music to be more
effective when tailored to the listening preferences of the demographic segment’.
Herrington and Capella (1994, pp. 57-58) indicated that to ‘determine the most
appropriate background music, a retailer must carefully define the selected target
market and the specifics of this market including age, income, education,
gender...and familiarity with the music’.
3.3.1.4 Music Familiarity
Familiar and unfamiliar music tends to particularly impact customers perceived time
spent within a service setting. Yalch and Spangenberg (2000, p. 141) found that
‘familiar music, relative to unfamiliar music, may cause individuals to spend less
time shopping but perceive themselves as spending more time’. Bailey and Areni
(2006, p. 195) also found that ‘familiar music reduced duration compared to
unfamiliar music’. The longer perceived spending time when listening to familiar
music may exist due to more information being stored when listening to music that is
familiar (Kellaris and Kent 1992). Yalch and Spangenberg (2000, p. 142) suggest
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that ‘it is expected that individuals listening to familiar music will be more aroused
and spend less time shopping than individuals listening to unfamiliar music.’
However, from their findings Sweeny and Wyber (2002) contradicted previous
research and suggested that familiarity of the music did not add any clarification in
explaining consumers’ emotional states and cognitive process. Familiar music can
sometimes be disliked by consumers and unfamiliar music liked. Sweeney and
Wyber (2002, p. 62) findings suggested that ‘consumers’ liking to music played a
major role in explaining consumers’ emotional states and cognitive processes’.
Kellaris and Kent (1992, p. 368) indicated that ‘there may be a tendency to devote
more attention to liked music or to retain more information’. Sweeney and Wyber
(2002, p. 64) indicated that ‘musical liking is far more important than considering
what they [consumers] are familiar with’.
From previous research there is evidence to suggest that music is an important factor
in a service environment and that its impact on the consumer can affect their
approach-avoidance behaviour. However Herrington and Capella (1996, p. 26) noted
that ‘knowledge of musical effects remains somewhat limited’. There has been
conflicting research, particularly in the areas of tempo and volume. Morin et al.
(2007, p. 116) noted that ‘despite evidence that music influences various service
components, which combine to shape service outcomes, as well as these outcomes
proper, the mechanisms by which music operates remain under researched’ and
called for further research.
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Music and its varying components whether they are viewed in isolation or together
play an important role on the service atmosphere, perceived length spent in the
service and on the customer’s internal response. Also it is inevitable that consumer
response to music within a service environment may be influenced by the other
elements, e.g. colour, décor, lighting and layout (Oakes 2000). There is a need for all
atmospheric variables to be researched together (Milliman, 1982). Babin et al. (2003)
emphasised the need for further research when they indicated that the possibility
exists that colour may interact with other ambient characteristics, such as music and
may alter consumer reactions to a store. Colour is the next element that will be
investigated.
3.3.2 Colour
‘Colour is a key element in the environment for the human and other species and,
from an evolutionary perspective, the ability to discriminate colours and tendencies
to approach some and avoid others can be essential for survival.’
Crozier (1999, p. 6)
Colour has been suggested as one of the most obvious visual cues in a servicescape
(Lin, 2004). Crowley (1993) pointed out that though it is a pervasive part of
everyday life that it existence tends to be taken for granted. It plays a vital part in the
service environment that should not be ignored. Kotler (1973) noted that
atmospherics should create a positive feeling and help soothe the customer. Retailers
have traditionally used colour to portray an image or create a desired positive
atmosphere (Bellizzi et al., 1983). Madden et al. (2000, p. 92) indicated that ‘colour
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influences both human behaviour and human physiology’. Nitse et al. (2004, p. 900)
further suggested that ‘colour is actually a sensation just like touch’. The colour of a
firm’s physical environment often makes the first impression; it can be seen on their
brochures, business cards, online, the exterior and the interior of the faculty
(Crowley, 1993; Gorn et al., 2004).
For retailers there has been little research on the impact of colours and a considerable
amount has been borrowed from interior design and other literature. Funk and
Ndubisi (2006, p. 42) noted that ‘the colour literature is vast and highly fragmented’.
However similar to music, marketers are conscious of the impact that colour can
have on customer’s moods. Both customers and retailers are generally aware that
some colours are considered warm and uplifting and other colours are cooling and
refreshing. Grossman and Wisenblit (1999, p. 80) noted that ‘marketing practitioners
have used the association of arousal for warm and calming for cool colours in retail
settings.’ One example is the use of the colour red in casinos to stimulate gambling
(Grossman and Wisenblit, 1999). The choice of colours within a service setting is
essential in establishing a suitable atmosphere for that particular service. As Funk
and Ndubisi (2006, p. 41) noted ‘colour can stimulate interest and subsequently
increase the buying power’.
It is commonly accepted that colours can possess emotional and psychological
properties (Madden et al., 2000). In service environments colour can be used to
attract or draw the customer in and gain attention. Aslam (2006, p. 15) agreed and
suggested that colour ‘induces moods and emotions, influences consumers’
perceptions and behaviours’. Danger (1968) noted the effects that bright and dark
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colours can have on temperature control. Whilst Bellizzi et al. (1983) pointed out the
effects that colour can have on moods, warm colours such as red, yellow or orange
were more exciting and cool colours such as blue and green were more relaxing. The
colour blue for example is perceived as a cooling colour and is often used in
bathrooms to create a relaxing pleasant environment. It is important to note that what
draws or attracts a customer into a service environment may differ to what attracts
them to stay within the service environment. Generally customers are more drawn in
by warm colours however red retail environments were found to be unpleasant,
negative, tense, and less attractive than cool colour environments (Bellizzi and Hite,
1992).
Bellizzi et al. (1983, p. 22) noted two concepts in retail store design; ‘the concept of
approach orientation and physical attraction’ Bellizzi et al. (1983, p. 22) indicated
that ‘approach orientation of colour is defined as the power of stimulus colour to
encourage attention during and after exposure to this stimulus’. Research has shown
that some colours evoke an approach tendency whilst other colours encourage
avoidance behaviours (Babin et al., 2003). Physical attraction is described as the
attention getting power (Bellizzi et al., 1983). McDonalds is a prime example of a
service environment that uses physically stimulating vibrant red and yellow colours
on their exterior to attract customers into the environment.
Danger (1968) suggested that warm colours such as red, yellow or orange are
impulsive, emotionally arousing colours and should be used for attracting attention.
Interestingly McDonalds also use the same overloaded colour scheme in their
internal environment. Bellizzi et al. (1983) indicated that warm colours can be
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irritating and that retailers must be careful not to bombard the customer with over
loaded stimulated colours as this can cause avoidance behaviour among them.
However, McDonalds is a fast food restaurant that does not want their customers to
stay for a long time in the service environment. Their choice of bright yellow and red
interiors is excellent, as it discourages customers to stay in the environment. Within
an upmarket restaurant setting these vibrant colours could have a negative impact on
the customer’s decision to stay within the environment. Bellizzi et al. (1983, p. 32)
indicate how the impact of colour can affect the behaviour ‘too much excitement and
attraction can lead to shopper avoidance of uncomfortable environments’. The
connection between the ambient condition of colour and approach-avoidance
behaviour is clearly indicated in Bitner’s (1992) model.
Crozier (1999) noted that when colours are talked about they are generally discussed
in terms of reds, blues, greens and other colours. However these terms only refer to
one of the three basic properties of appearance and that is hue. Bateson and Hoffman
(1999, p. 143) identified ‘the psychological impact on colour on individuals is the
result of three properties, hue, value and intensity’. Much can depend on the strength
of the hue. Hue refers to the family that a colour belongs too, such as red, blue, and
yellow and corresponds to the wavelength of light (Crozier, 1999). Crozier (1999, p.
7) noted that ‘blue and green are at the low wavelength end of the spectrum and red
and orange at the high end’. Janssen et al. (2004) concurred and further indicated that
hue is the pigment of the colour. The strength of a hue can determine its affects or its
associations with emotional feeling. For example, blue can be associated with
emotions ranging from sedate tranquillity to suppression of feelings (Bellizzi et al.,
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1983). Cool, short wavelength colours are generally preferred to warm, long
wavelength colours (Babin et al., 2003).
Value defines the lightness or the darkness of the colour, these are generally known
as the tints (lighter values) or shades (darker values) of the colour (Bateson and
Hoffman, 1999). Crozier (1999, p. 7) noted that value is also a ‘function of the
energy of the light source and corresponds to the amplitude or height of the wave.
Intensity, saturation or chroma all refer to the apparent clarity or purity of the colour
(Crozier, 1999; Bateson and Hoffman, 1999). Funk and Ndubisi (2006, p. 44)
suggested that ‘chroma is not independent of value as marked changes in amplitude
will affect the purity of the hue, and the three accounts for colour and attractiveness’.
Janssen et al. (2004) indicated that chroma is also the proportion of pigment within
the colour. Crozier (1999, p. 7) point out that chroma ‘is associated with the
complexity of the light wave, in that a light wave that is composed of only a few
different wavelengths will appear most saturated and least diluted’.
Colours can generally be classed into two categories, or two hues that represent
warm colours and cool colours (Hyodo, 2011). Crozier (1999, p. 6) noted that ‘a
substantial body of research suggests that the rank order of preference for hues -
blue, red, green, violet, orange, yellow - emerges with some degree of consistency’.
These colours are the colours that can be viewed as wavelengths of visible light and
can be ordered from long to short wavelengths as follows red, orange, yellow, green,
blue and violet (Crowley, 1993). Research indicates that there is no one preference
for cool or warm colours. However Crozier (1999) noted that blue in particular is
regularly preferred to other hues. Mehrabian and Russell (1974) also found that
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maximal pleasure associated with colours was found in the blue and green regions of
the visible spectrum. Bellizzi et al. (1983, p. 26) remarked that ‘preference for blue is
thought to indicate well controlled emotions and behaviour’. Bellizzi and Hite (1992)
observed that blue produced more positive outcomes then red. The meanings that are
associated with blue and the other visible colours of the spectrum can be seen in
table 3.1.
Crowley (1993) noted that ‘different effects an associations engendered by various
colours of stimuli have been found consistently in psychological research’. Lewison
(1991) identified six colours and classed the perceptions of the colours within the
two hues of warm and cool colours. These six colours coincide with Crozier’s (1999)
six identified preferred colours. Bellizzi et al. (1983, p. 25) indicated that ‘blue is the
coldest of the cool colours, and is near the opposite end of the spectrum from red, the
hottest colour’. ‘This visible spectrum is but a small part of the total spectrum of
wavelengths’ (Crowley 1993, p. 60).
Lin (2004, p. 168) indicated that ‘research has shown that different colours stimulate
varying personal moods and emotions’. Danger (1968) It would appear that colour
associations are tied in with psychological effects and that colours have numerous
association (Danger 1968, Crozier 1999). Crowley (1993, p. 60) concurred and
observed ‘that certain colours, especially red, are more physiologically and
psychologically activating than other colours’. As can be seen in Table 3.1, colours
can be perceived as having many different meanings, feelings or emotions and
clearly can have some impact on mood.
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Bateson and Hoffman (1999) noted that despite their psychological effects different
combinations of these warm and cool colours can create many varied, relaxing yet
stimulating atmospheres. Retail shops could enhance approach behaviour through
using bright warm colours such as red, orange or yellow on the exterior. Warm
colours could attract the customers in, once in the shop the interior design of the
shop could have more calming cool colours, thus maintaining the approach
behaviour through having a pleasant yet arousing atmosphere. Donovan and Rossiter
(1982, p. 56) concur with Bateson and Hoffman (1999) and further indicated the
affects on behaviour in that ‘the correct emotional combination of pleasantness and
arousal created by store atmosphere can stimulate shopping behaviour within the
store’.
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Warm Colours Cool Colours
RED YELLOW ORANGE BLUE GREEN VIOLET
Love Friendliness Sunlight Coolness Coolness Coolness

Romance Warmth Warmth Aloofness Restfulness Shyness
Courage Brightness Openness Calmness Peace Dignity
Danger Openness Friendliness Masculinity Freshness Wealth
Cheerfulness Happiness Happiness Assurance Growth
Excitement Sunlight Glory Sadness Softness
Warmth Fidelity Richness
Enthusiasm Go
Stop
Table 3.1 Perceptions of Colours

Source: Lewison (1991, p. 277)
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Bellizzi and Hite (1992) investigated the role of colour to induce moods or feelings
that may subsequently induce behaviour or behavioural intentions. Their research
followed on from Bellizzi et al. (1983) study, which identified an evaluation link and
concluded that customers view red as more negative and unpleasant than blue but
equally arousing, (Bellizzi and Hite, 1992). Bellizzi and Hite (1992) found that
customers act more favourably in a blue environment in retail settings. Verhoeven et
al. (2006) concurred and noted that with in the healthcare setting; blue environments
alleviated anxiety, improved emotions and give an improved perceived service
quality. Bellizzi and Hite (1992) also found that warm coloured backgrounds seem to
be more attention grabbing and attract people to approach the store. Bellizzi et al.
(1983, p. 39) noted that subjects may be ‘physically drawn to warm colours but feel
warm colour environments are generally unpleasant’. Bellizzi et al. (1983) found that
subjects rated cool coloured store environments as more pleasing and attractive than
warm coloured store environments.
From their research Bellizzi and Hite (1992, p. 357) noted that ‘subjects in the blue
environment expressed a greater intention to shop, browse and buy’. However
Bellizzi and Hite (1992) note that their findings were based on an experimental study
and that caution must be taken in generalising the research. Bellizzi and Hite (1992)
determined that colours influence people’s emotional pleasure stronger then arousal
and found that customers reacted more favourably to ‘cool’ store interiors. Their
findings also suggest that store colour is important in understanding customer
behaviour (Babin et al., 2003).
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It is also worthwhile to note that the meanings associated with colours can vary from
one culture to the next. Grossman and Wisenblit (1999, p. 83) noted that ‘cultures
may adapt similar or different meaning to colours’. The way people learn to
associate meaning with different colours needs to be considered, for example the
‘funeral colour in the west is black, and in the east is white’ (Kotler, 1973, p. 52).
Within the western societies black is perceived as a morbid colour and could evoke
feelings of unhappiness and unpleasantness. Meanwhile in Indian culture black is
associated with dullness and stupidity (Grossman and Wisenblit, 1999). Funk and
Ndubisi (2006, p. 42) illustrated that ‘white has been associated with peace and
purity and red the colour of blood representing strength, health and passion’.
Grossman and Wisenblit (1999) noted that in the west red is associated with love but
in china it suggests ambition and desire. Aslam (2006) suggest that a dynamic
culture-sensitive approach in colour research and its strategic use will help predict
purchasing behaviour.
‘Overall, while it is seen that colors do have an effect on mood, this effect varies by
context and subject’ (Hyodo, 2011, p.864). Crowley (1993, p. 59) observed that ‘the
psychological effects of colour have received some attention in the consumer
behaviour literature’ however ‘knowledge of these affects is limited at best’. From
the studies described above the colour blue has consistently shown strong evaluative
appeal. On the other hand the colour red consistently emerges as the most activating
yet is one of the least preferred colours in an evaluative sense. Crowley (1993, p. 67)
noted that ‘the evaluative responses to a colour can be quite different from the
activation effects of colour’. These emerging colour patterns suggest that further
research would be beneficial in understanding the affects of colours on approach-
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avoidance behaviour. The next element to be looked at is lighting. Lighting and
colour have often been researched together (Spies et al., 1996, Babin et al., 2003).
3.3.3 Lighting
Areni and Kim (1994) indicate that only a small subset of Kotler’s (1974) in-store
variables have been studied empirically. As previously noted, music and colour to
date have been the most researched variables. Though there has not been much
research conducted on lighting, it has been considered an important component of
store atmosphere since Kotler’s (1973) study (Mehrabian and Russell 1974, Spies et
al. 1996). Steffy (1990) and Ching (1996) indicated that lighting influences the
perceptions of space, volume, form, texture and colours. People’s awareness of
lighting can influence their perceptions about the stores environment (Lin, 2004).
Summers and Hebert (2001, p. 145) indicated that ‘a more appealing store with
better-illuminated merchandise may entice shoppers to visit the store, linger, and
hopefully make a purchase’. Hasty and Reardon (1997, p. 281) agree and
recommend that ‘lighting should match the mood the retailer is attempting to create
with the rest of the store décor’.
In past research lighting has been associated with colour and both elements have
been researched together. Babin et al. (2003, p. 542) focussed on colour and lighting
interaction and suggested that ‘certain combinations of lighting and colour fit better
(are assimilated more easily) into specific categories’. As with the other stimuli
discussed the fit or congruency of lighting with the environment is important. Nitse
et al. (2004) indicated that lighting can affect the colour of an object or the
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merchandise. Similarly to colour, retailers use information from interior design and
architecture literature to understand the benefits or effects that different lighting can
have. Unlike music and colour there is no existing model for the effects of lighting
on behavioural intentions.
Retailers use many different types of artificial lighting to create their desired
atmospheres. Natural sunlight is also used to create desired atmospheres. Gifford
(1988, p. 178) noted that ‘human activity levels should generally increase in day
time or in bright lights; as light dims, activity should slow down.’ However the
creation of artificial lighting has allowed more activity to occur at nightfall (Gifford,
1988). Retail stores can use fluorescent lights, halogen/quartz bulbs, and
incandescent lights to create an atmosphere. Diamond and Pintel (1996, p. 299)
recognise that ‘incandescent lights has been the mainstay for visual lighting for many
years’. Hasty and Reardon (1997) note that fluorescent lighting frequently build up
blues and purples and can help bring out colours. Gifford (1988) noted that lower
light levels are associated with an increase in intimacy. Each of the different lights
can create or deliver a different look or feel to the merchandise. When applied with
other ambient factors such as, music or colour, lighting can have significant
implications for a stores atmosphere.
Steffy (1990) indicated that environments in which lighting complements other
environmental stimuli are perceived as more pleasant. Baker (1994) notes a store
described as having a combination of bright, fluorescent lights (soft incandescent
lights) and popular (classical) background music causes consumer reactions with a
discount (prestige) image. Yalch and Spangenberg (2000, p. 140) concurred and
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indicated that ‘a manager might choose classical music, subdued colors, elegant
perfumes, cool temperatures, sparsely displayed merchandise and low lighting to
project an upscale image’. ‘Lighting can help achieve the overall image’ that the
store is trying to project (Hasty and Reardon, 1997, p. 281).
Depending on the service environment it is important to note the arousing effects of
lighting. Mehrabian (1976, p. 89) indicated that lighting is an extremely important
variable of the environment because ‘brightly lit rooms are more arousing then dimly
lit rooms’. In a high class restaurant, dim lighting is appropriate in creating an
intimate environment (Gifford, 1988). In stores such as McDonalds or Burger King
bright lighting is appropriate in creating an atmosphere coherent with the fast paced
lifestyle it portrays. Hasty and Reardon (1997, p. 281) concurred with Mehrabian
(1976) and emphasised that lighting ‘is an integral part of the store’s interior and
exterior design’. Lighting can be used to highlight merchandise or sculpt an
environmental space in order to capture an atmosphere suitable for the store (Levi
and Weitz, 2004). Levi and Weitz (2004, p. 611) suggest that ‘having the appropriate
lighting has been shown to positively influence customer shopping behaviour’.
However too little or too much lighting or even the wrong type of lighting can create
false impressions about the merchandise and create an opposite image to the desired
(Hasty and Reardon, 1997).
Areni and Kim (1994, p. 118) noted illumination of store design has received little
attention and ‘that its effects on consumers has yet to be examined empirically’.
Summers and Hebert (2001) concur and noted that though the importance and
benefits of lighting are generally acclaimed for retail environments, very few
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empirical retail lighting studies have been conducted. Of the few research studies
that that have been conducted there are inconsistencies. Summers and Herbert (2001,
p. 149) findings suggest that ‘light levels do contribute to consumer approach
behaviour’. Their findings also suggest that changing in store lighting may achieve
an increase in general consumer involvement. However Cuttle and Brandston (1994)
findings are conflicting. They looked at two stores within their research. One stores
lighting clearly influenced customers but for the other store there was no consistent
trend to be found in the lightings affects. Variation within the research clearly
demonstrates the need for further research in lighting and its effects (Areni and Kim,
1994, Summers and Hebert, 2001).
3.3.4 Olfaction
The sense of smell is active all the time; we breathe, therefore, we must smell.
(Toller et al., 1985, p. 5)
Ambient scent is odour or olfaction that is not just emanating from any particular
object but is to found present in the service environment (Spangenberg et al., 1996).
Freedman (1993) noted that of all the senses, olfaction provides the most direct link
to the environment. Marketers are aware of this link and use olfaction in consumer
settings such as retail stores or shopping centres as a stimulus in the external
environment (Donovan and Rossiter, 1984). It is important to note the many
different titles given to odour, olfaction, smell, scent, ambient scent or odour. One
reason behind the many differences lies in its place of origin. For example in the
USA/Canada it most commonly referred to as odor, olfaction or ambient scent
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(Henion, 1971; Knasko et al., 1990; Chebat and Michon, 2003; Spangenberg et al.
2006). In Europe it is often referred to as odour or scent (Aggleton and Waskett,
1999; Bosmans, 2006). For consistency it will be referred to as olfaction, unless
specific papers are being cited.
Mitchell et al. (1995, p. 229) noted that the ‘beliefs in the power of ambient odor to
affect consumers thoughts and ultimately their behaviour have relied largely on
intuition rather than empirical findings’. To date there has been a significant body of
research on the effects of olfaction on human physiology and psychology (Bone and
Ellen, 1999, Turley and Milliman, 2000). In contrast Orth and Bourrain (2005) noted
that there has been limited research on the effects of olfaction on consumer
behaviour. Compared with the other sense of vision and hearing, the sense of smell
is an under researched topic (Morrin and Ratneshwar 2000). Even Mehrabian and
Russell (1974) did not pay much attention to olfaction. Due to its lack of research
olfaction has surrounded itself with an air of mystery. Davies et el (2003, p. 613)
indicated that the ‘notion of smell as ‘mysterious’ is perhaps in part generated as the
result of our limited knowledge concerning the complexity of smell reception and
processing’.
To date much research on olfaction has been in environments such as hospitals,
housing projects and various types of institutions (Morrin and Ratneshwar, 2000).
Though there has been limited research, Morrin and Ratneshwar (2000, p. 157) point
out that ‘the use of ambient scent, or atmospheric odor, as a means to affect human
behaviour appears to be on the rise’. As Chebat and Michon (2003, p. 537) reveal ‘it
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is probably among one of the least expensive techniques to enhance shoppers
perceptions’.
Gulas and Bloch (2005) noted that ‘scent’ is relevant to consumption in two ways,
firstly ‘scent’ is part of the overall ambient environment and secondly ‘scent’ is
directly associated with the appraisal of the object (Bone and Jantrania, 1992).
Scents have the potential to create moods, influence feeling states, evoke
associations from memory and affect product judgment (Ehrlichman and Halpern,
1988, Bone and Jantrania, 1992, Morrin and Ratneshwar, 2000, Spangenberg et al.,
2006). Bosmans (2006, p. 31) illustrated that ‘retailers have been using scents in the
marketplace for a long time to influence consumers' buying behaviour and
satisfaction.’ To date, marketing efforts in the area of olfaction have focused largely
on its impact on approach avoidance behaviour (Morrin and Ratneshwar 2000). Orth
and Borrain (2005, p. 140) indicated that ‘many researchers suggest odour
pleasantness affects moods and mild affective states’. Spangenberg et al. (1996)
found that ‘pleasant scents’ improved consumer’s ratings of the store environment,
the store merchandise and increased consumer’s intention to return. However the
psychological mechanisms underlying the experiential effects of olfaction on
approach-avoidance behaviour are not entirely understood (Morrin and Ratneshwar,
2000). As Bone and Jantrania (1992, p. 290) suggest it is over simplifying to state
that ‘if it smells good-they (consumers) will come’.
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3.3.4.1 Olfaction Models
Similarly to music, olfaction has a model that is based on Mehrabian and Russell
(1984) S-O-R model and Bitner’s (1992) servicescape model. Gulus and Bloch
(1995) indicated that their model, (figure 3.4), is congruent with these larger scale
models and that it incorporates variables that appear most promising in explaining
the role of ‘ambient scent’ in influencing consumer behaviour. Davies et al. (2003, p.
614) concur and indicate that ‘the model attempts to identify the chief factors related
to individual consumers and their approach-avoidance behaviour’. Davies et al.
(2003) went on to elaborate the Gulus and Bloch (1995) model. They indicated that
the Gulas and Bloch (1995) model represents a significant move in developing
specific considerations of ‘ambient scent’ perception. Due to the complexity of the
Davies et al. (2003) model, Gulus and Bloch (1995) model is depicted here as their
model forms the main basis of Davies et al. (2005) extended model. The main factors
identified in the Gulus and Bloch (1995) model are perceived ambient scent, scent
preferences and affective responses.
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Moderators
 Other atmospheric elements
 Scent congruity
Objective Perceived Affective Approach-

ambient ambient Response Avoidance
scent Scent Reactions
Acuity Scent
Preferences
Individual
characteristics
 Age
 Gender
 Other
individual
differences
Physiological predispositions Past experiences
Figure 3.4 The Influences of Ambient Scent on Consumer Responses

Source: Gulus and Bloch (1995, p. 90)
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The ambient scent must be apparent in the service environment in order to influence
consumer behaviour (Gulus and Bloch 1995). Gulus and Bloch (1995) note that there
is much difference in the perception or acuity of olfaction and that much of this
variation appears to be logical. For example individual characteristics such as age,
gender, illness and smoking can affect perceived levels of olfaction (Toller et al.,
1985, Hirsch, 1992, Aggelton and Waskett, 1999). Davies et al. (2003) in their
extended model suggested that ‘perceived ambient scent’ has both conscious and
unconscious elements. ‘This reflects the possibility of a smell being perceived in a
pre-attentive manner’ (Davies et al. 2003, p. 621). This may lead to situations where
consumers respond to olfaction without realising (Davies et al., 2003).
The second factor being considered is scent preferences. Obviously there are notable
differences in scent preferences among consumers however some generalisations can
be made. Some smells are particularly considered to be unpleasant; the smell of gas,
sour milk and decaying vegetation. These smells influence behaviour in obvious
ways (Lawless 1991). The nastier and the more unpleasant the smell the quicker
people’s reactions to it (Davies et al. 2003). In these instances scent preferences
serve as a defensive or warning purpose protecting us from illness or danger (Gulus
and Bloch, 1995).
Hirsch (1992) noted also that gender and age may influence scent preferences. He
found that food smells would be more efficient in targeting younger consumers then
natural smells, such as pine, hay, grass and that the opposite held true when targeting
an older consumer group (Hirsch, 1992). Gulus and Bloch (1995, p. 91) suggested
that ‘shared past experiences may help explain age and gender differences in scent
139
preferences’. From their model in figure 3.4 Gulus and Bloch (1995) identify that
when scent preferences are combined with perceptions of ambient scent that it can
influence consumer’s affective responses.
Bone and Ellen (1999) developed a similar framework that identifies variables that
effect consumer’s affective responses. Their framework identifies three primary
dimensions that are considered important. The dimensions are its presence (or
absence), its pleasantness and its fit or congruity. The model is called ‘conventional
wisdom view of olfactory effects’ and portrays these dimensions and their effects on
consumer behaviour. Figure 3.5 depicts their model. Both models suggest
frameworks that illustrate the affects that olfaction has on affective responses. Before
looking at Gulus and Bloch (1995) third variable of consumer’s affective response,
Bone and Ellen’s (1999) three dimensions will be looked at.
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Odor Moderators Effects upon person (Mediators) Response to Scent Stimulus
Presence Individual Approach/Avoidance Affective Response

differences to object
Mood
Task or Evaluation
Pleasantness Arousal
Context Response to object
Valence
Effects
(Positive/Negative)
Intent
Cognitive Effort
Congruity/ Behaviour
Availability of resources
Fit
Elaboration Time spent
(Existence of learning of
cognitive association)
Information search
Figure 3.5 Olfaction Model
Source: Bone and Ellen (1999, p. 245)
Choice
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Presence is the first of the three dimensions. Davies et al. (2003) note that ‘scents’
are an environmental cue that can be difficult to identify and customers can be
unaware of a scents influence or presence. However the presence of a smell can
trigger behaviour (Hirsch, 1992). The more intense ‘the scent’ is the more noticeable
it is to the consumer. Spangenberg et al. (1996, p. 69) ‘suggest that the relationship
between scent intensity and affective reactions depend on how pleasing the scent is’.
Bone and Ellen (1992, p. 249) identified that ‘there are two primary but related
characteristics of odors: quality and intensity’. Quality refers to its perceived
pleasantness or unpleasantness and intensity refers to the concentration of ‘the scent’
(Mattila and Wirtz, 2001). Spangenberg et al. (1996, p. 69) identified a third
dimension called ‘its arousing nature (e.g. how likely it is to evoke physiological
response)’. This first dimension of quality coincides with Bone and Ellen’s (1999)
variable of pleasantness. Bone and Ellen (1999, p. 249) suggest that ‘the more
pleasant (unpleasant) the scent the stronger and more positive (negative) the effects
of moods and evaluations.
Bone and Jantrania (1992, p. 290) indicated that ‘humans perceive scents to have
only one primary dimension-that of pleasantness’. Orth and Bourrain (2005, p. 140)
defined scent pleasantness ‘as a scent’s individually and positively evaluated
stimulation of the olfactory senses’. Knasko (1995, p. 479) found that ‘pleasant
odors may have some general effects due their hedonic value’. Bone and Jantrina
(1992, p. 290) also argue that ‘odor effects are hedonic because the area of the brain
that interprets olfactory stimuli (the hypothalamus) is also the emotion centre of the
brain’. Ehrlichman and Halpern (1988, p. 770) noted that ‘virtually no mental effort
is involved in experiencing odor...odors are simply there’. Hirsch (1992, p. 391)
142
concurred and identified that ‘the most powerful impact upon emotions is through
the sense of smell.’ This makes ‘ambient odor’ an important atmospheric variable to
study because ‘odors’ have an increased likelihood of producing emotional reaction
from consumers (Michon et al., 2005).
Mehrabian and Russell (1984) suggest that ambient factors, like olfaction, affect the
PAD dimensions, the classification of the emotionally responses, which in turn affect
approach-avoidance behaviour. However Lawless (1991, p. 366) indicated that the
complexity of the multiplicity of connections and interactions with in the limbic
system (the part of the brain at the centre of emotions) ‘do not lead themselves to
simple theories connecting the relationship of smell to specific emotions’.
Aggleton and Waskett (1999) noted that olfaction has been linked to the ability to
recall strong emotions and both pleasurable and un-pleasurable memories. Morrin
and Ratneshwar (2000, p. 162) found that ‘pleasant scents improved memory, at
least in part, through an encoding effect. Encoding refers to the initial acquisition of
information and involves the amount and depth of processing’. As previously noted
Mehrabian and Russell (1984) introduced the notion of ‘information load’ to
measure environmental stimulation (See chapter two). Donovan and Rossiter (1984)
noted that high or low load environments can affect the emotional states of the
consumer. However Davies et al. (2003, p. 617) note that ‘as a stimulus, smell is
more difficult to examine, as responses to the stimulus can be pre-programmed and
therefore do not need attention (or even much processing) to generate response’.
143
Bone and Ellen (1999, p. 253) specified that ‘olfaction information can be quite
ambiguous, compared to other cues’. Knasko et al. (1990, p. 1355) concurred and
indicated that it is not ‘safe to assume that odor exposure by itself is the sole factor at
play in studies of response to olfactory stimuli.’ Cognition bias may play a role in
the response to ambient odour. For example, the ability to recognise a lemon scent is
greater if presented in yellow rather than red form (Bone and Ellen, 1999). Mitchell
et al. (1995) found that when the ‘ambient odor’ was congruent with the product
class subjects spent more time processing information. Bone and Ellen (1999, p.
253) usefully point out that ‘the observed affect of scent pleasantness on mood
valence, is clearly a case of accessible information being valenced, and in turn,
affecting consumer’s mood’.
Hirsch (1992, p. 391) noted that ‘judgement as to the pleasantness or the
unpleasantness of various odours depends too upon who we are and where we live’.
Similarly Gulus and Bloch (1995) note that age, gender and nationality can influence
our judgement on the pleasantness of an odour. Davies et al. (2003) indicated that
gauging what is pleasant and unpleasant, beyond the basic warning smells, is not
easy and that it is not consistent across cultures.
The third of Bone and Ellen’s (1999) dimensions is fit or congruity. Similarly to
music and colour, olfaction must fit in with its environment. Mattila and Wirtz
(2001, p. 285) indicated that ‘environmental stimuli should not be considered in
isolation, since it is the total configuration of cues that influence consumer response’.
Bone and Jantrania (1992, p. 290) indicate that ‘the appropriateness of the scent must
be considered’. ‘Some odors, although generally perceived as pleasant, may be
144
viewed as inappropriate in a particular context’ (Bone and Ellen, 1999, p. 251). The
proposal that the suitability of the scent may determine its influence on evaluating
the service environment suggests that ‘odors’ affects are partially dependent on
cognition (Bone and Jantrania, 1992). Consumers may learn an association between
the smell and the object or even a place. For example the smell of pine suggests
cleanliness and the smell of disinfectant is a reminder of hospitals.
Bone and Jantrania (1992) research focussed solely on product scents and it is
important to note the difference between product scent and ambient scent. As Gulas
and Bloch (1995 p, 89) most adequately point out ‘unlike product scent, ambient
scent can potentially influence reactions to all products sold in a given setting,
including those that would be difficult or inappropriate to add fragrance’.
Spangenberg et al. (2005, p. 1584) indicated that ‘many retailers have begun to rely
on ambient scents not associated with any particular product to attract customers and
influence them once in the store environment’. However research on ambient scent is
less common then object or product scent (Gulus and Bloch, 1995, Bone and Ellen,
1999).
3.3.4.2 Affective Responses
Both models suggest that olfaction affects emotions which in turn affect consumer
responses. Bone and Ellen (1999, p. 244) outline that ‘odors are hypothesized to
affect consumers by changing approach/avoidance behaviours, altering moods state
and affecting elaboration’. Gulus and Bloch (1995, p. 93) indicate that ‘affective
responses to ambient scent are expected to result in approach or avoidance reactions
145
relevant to the consumption situation’. This coincides with the Mehrabian and
Russell (1974) model and Bitner’s (1992) model. However Bone and Ellen (1999, p.
250) indicate that ‘evidence of a direct relationship between scent pleasantness and
evaluative response is mixed’. Michon et al. (2005, p. 577) concur and appropriately
note ‘using odor as a strategic atmospheric variable is risky because odor effects are
difficult to predict’. Nonetheless Bone and Ellen (1999) do note that never has a
pleasant (unpleasant) ‘odor’ have a negative (positive) affect on consumers.
As previously noted atmosphere is multidimensional. Gulus and Bloch (1995, p. 92)
signify that ‘non-scent characteristics of the environment may influence the level of
affective responses that would otherwise result from scent alone’. For example the
effects of a pleasant olfaction may be increased by the presence of pleasant music or
colour. Gulus and Bloch (1985, p. 92) indicate that ‘the combination of these factors
may be greater than the sum of the parts’. Knasko (1995) noted that the congruency
of ‘odor’ with the environment is also extremely important. Bone and Jantrania
(1992) suggested that the congruity of a products scent with the products attributes
influences scent reactions. A similar reaction may occur with ambient scent (Gulus
and Bloch, 1995).
Mitchell et al. (1995) suggested that pleasant ‘ambient odors’ are found to affect
consumers’ decision making depending on whether the ‘odors’ are congruent or
incongruent with the target product class. A ‘congruent odor’ would be the smell of
coffee from a coffee store or the smell of perfumed candles and soaps from a bath
shop. An ‘incongruent odor’ would be when the smell strongly associated with one
product class for instance, the ‘coffee odor’, may be presented while the consumer is
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making a decision about another product class, for instance perfumed candles
(Mitchell et al., 1995). This can often be the case in shopping centres when the two
stores are placed beside each other. Gulus and Bloch (1995, p. 92) noted that ‘a
pleasant scent may not elicit positive affective responses when the scent is
mismatches with other features of the environment’.
Spangenberg et al. (2006) concurred and suggested that pleasant ambient scents can
be unsuccessful in their desired affect if they are incongruent with consumers’
expectations or preferences regarding a store. Spangenberg et al. (2006, p. 1286)
found that ‘scent appropriateness or congruity is an important evaluative influence’.
For example a floral scent that is pleasing in isolation may be viewed as
inappropriate for a motorcycle dealership (Gulus and Bloch, 1995).
Mattila and Wirtz (2001) empirically demonstrated the effects that music and
olfaction can have when suited to one another and the environment. They found that
when the scent of lavender, a low arousal scent, was combined with slow tempo
music, low arousal music, it led to higher evaluations then using the same scent with
high arousal music. Also when fast tempo music, high arousal music, was combined
with grapefruit, high arousal scent, it had a more positive effect on approach
behaviour then when the music was combined with lavender. Their findings
indicated that when ‘stimuli in the environment act together to provide a coherent
atmosphere, the individual in the environment will react more positively’ (Mattila
and Wirtz, 2001, p. 285). Morrison et al. (2011) conducted research on music and
olfaction and their research combined high volume music and a vanilla aroma. This
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resulted ‘in an enhancement of pleasure levels, suggesting a congruency effect’ that
was similarly to Mattilat and Wiirtz (2001) research (Morrison et al., 2011, p. 562).
Spangenberg et al. (2005, p. 1587) were of the same mind and their findings
indicated that ‘consistency between an ambient scent and music in a retail setting
leads to more favourable evolutions of the store, its merchandise and the store
environment’. Spangenberg et al. (2005) also found that behavioural intentions to
visit the store are positively affected by the fit or consistency between ambient scent
and music. Spangenberg et al. (2005) suggested that in some cases when there was
an inconsistency between the two stimuli that evolutions and behavioural intentions
are either not affected or negatively affected. Chebat and Michon (2003), Mitchell et
al. (2005) and Morrison et al. (2011) concurred and indicated that the congruency of
the olfaction affected consumer decision making and behaviour.
Also important to consider is consumers awareness of olfaction affecting their
behaviour. Many consumers may be unaware of olfaction in the environment. Davies
et al. (2003, p. 622) indicated that ‘consumers responding to smell without realising
can lead to difficulties for retailers and researchers’. The use of olfaction can
however achieve response without distracting from other stimuli such as colour or
music. For researchers the fundamental problem exists of how to assess whether a
response is related to an olfaction stimulus when the consumer is unaware that they
are actually processing that stimulus (Davies et al., 2003).
Over the years olfaction has received a mixed response within research. Knasko
(1992, p. 27) specified that ‘research concerning the effects of odor performance is
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scarce and the findings are contradictory’. Some research has shown that pleasant
olfaction significantly increased approach behaviours such as lingering time or the
amount of time spent in stores. Knasko (1995, p. 484) findings suggested that
‘pleasant environments can improve mood and increase various types of approach
behaviour’. Knasko (1995) found that respondents in a pleasant room environment
reported being in a better mood and looked longer at the photographs then in a no
olfaction condition.
Research has suggested that olfaction increases the number of items purchased or the
total amount of money spent. Hirsch (1995) found that when in pleasantly scented
casinos gamblers spent more on slot machines then when it was not scented. The
actual figure was not identified. However Spangenberg et al. (2006) noted that
effects of congruent scents on sales are their most important finding as they found
evidence of the effects of varying scents on actual sales figures. These findings
suggest that like other environmental stimuli, olfaction can influence approach-
avoidance behaviour and mood. On the other hand, Orth and Bourrain (2005) found
that scents did not affect consumer stimulation directly and that dispensing pleasant
scents into retail environments does not necessarily enhance high consumer
stimulation resulting in exploratory behaviour. Knasko (1995) also indicated that
within their study, ‘pleasant odors’ did not influence the evaluations of the
photographs.
Toller et al. (1985, pp. 8-9) noted that ‘we now live in a highly odourised world,
whether or not we wish it’. Due to this it is important to begin to fully understand the
effects that olfaction can have on approach-avoidance behaviour. Knasko (1995, p.
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480) indicated that ‘in general malodors tend to depress mood and approach
behaviour while pleasant odors tend to improve mood and increase approach
behaviour.’ However it is difficult to predict how such an ‘odourised’ environment is
affecting sense of smell (Toller et al., 1985). Listening to high levels of sound can
damage the sense of hearing; similarly there lies the possibility that constant
exposure to high levels of scents and artificial scents may alter our sense of smell
over a lifetime (Toller et al., 1985).
Gulus and Bloch (1995) noted that any research in the area of atmospherics can
provide vital information and this is particularly true with in the area of olfaction
which has been largely ignored. For example it is acknowledged that environments
such as Starbucks and Insomnia recognise the importance of a fresh coffee smell in
attracting customers. However olfaction has still remained an under-researched
dimension. There is a much needed call for research and attention in the area of
olfaction and its affects on consumer approach-avoidance behaviour. As Lawless
(1991, p. 377) expanded on ‘while the amount of evidence for effects of odors on
moods and their physiological correlates is mounting, a coherent theory is lacking.’
The next element to be discussed is layout and similar to lighting, there has been
limited work carried out in this area.
3.3.5 Spatial Layout and Functionality
It was Kotler (1973) who began the debate about design, layout and other
atmospheric devices as influencing factors on consumer behaviour and their
patronage. Following on, Markin et al. (1976) focused on the ‘retail space’ and
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highlighted the importance of stimuli in retail space. Bitner (1992, p. 66) indicated
that ‘because service environments are purposeful environments,...spatial layout and
functionality of the physical surroundings are particularly important’. Many authors
have acknowledged the significance of a retail space and layout throughout the
literature (Spies et al., 1997, Aghazadeh, 2006, Kent, 2007). Kent (2007, p. 735)
clearly identified that as ‘experiences have become more important, the store
environment has taken on a greater significance providing space for interactivity,
socialisation and communication’.
Kent (2007, p. 737) also indicates that the ‘concept of retail space as serving a more
abstract social purpose concerns the use and design of retail spaces in the store itself,
and in the extension into the wider shopping environment’. The significance of the
visual and store layout in creating these social and purpose built service environment
is evident in the extensive literature surrounding servicescapes, store atmosphere and
visual merchandising. As Markin et al. (1976) pointed out, stores are designed to
create a dynamic interplay between the customer and the store.
It was Bitner (1992) who drew our attention to the servicescape variable of ‘Spatial
layout and Function’. Bitner (1992, p. 66) noted that ‘Spatial layout refers to the
ways in which machinery, equipment, and furnishings are arranged, the size and
shape of those items, and the spatial relationships among them’. Functionality refers
to the ability of those items to accomplish goals and facilitate performance in store
(Bitner, 1992). Aghazadeh (2006, p. 304, 306) noted that ‘the goal of a retail layout
is to maximise the sales of a store’ and ‘that companies should try to make the layout
as presentable and appealing to the customer’s eye as possible’. Davies and Tilley
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(2004, p. 11) note that ‘the design of the interior of his [the retailers] store can
facilitate the achievement of these objective is by the use of the most appropriate
fixtures and fittings, accessories and aisle widths and other environmental
considerations such as colours’. Newman and Foxall (2003) concurred and noted that
fixtures, fittings and the arrangement of merchandise are the retailers’ tools with
which to delight and engage the consumer.
The focus on layout has moved from being a display function to becoming more and
more important as a way of visual merchandising and retail design. Within the layout
literature ‘retail design’ overlaps with Bitner’s (1992) definition of ‘spatial layout
and function’. Retail design is concerned with the design of space to achieve
approach behaviour and ‘spatial layout and function’ is concerned with facilitating
performance and achieving service environment goals. Throughout the literature,
there is reference made to spatial layout, design, creative layout, store design, display
function or visual merchandising (Bitner, 1992, Lea-Greenwood, 1998, Davies and
Tilley, 2004, Kent, 2007). From the exterior window display to the interior shop,
each one concerns some aspect of display, layout or design surrounding the service
environment.
However layout and functionality is the least researched of Bitner’s (1992)
servicescape variables. Lea-greenwood (1998, p. 325) suggest reasons for the lack of
research could stem from its complexity and the difficulty to ‘meaningfully
communicate and analysis visual merchandising’. As mentioned, layout has many
associations and stems across many disciplines from retail design to visual
merchandising. Across each of the disciplines there has been a lack of academic
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research. Spies et al. (1997) noted that here have been very few studies about layout
and its effect on customer’s behaviour.
Davies and Ward (2005, p. 506) noted that ‘the literature that considers retail
physicality can be divided between those that consider the internality of the store and
those that focus on its externality’. According to Newman and Patel (2004, p. 775)
‘internal and external layouts help create the store atmosphere that is crucial for
success’. However Lea-Greenwood (1998, p. 325) noted that there has been more
reference to internal design and ‘although a number of in-store triggers are
identified; no direct mention is made of window display’. It is important to note that
though external and internal variables are frequently separated, they often draw from
each other to create the store atmosphere.
As noted, Bitner’s third dimension ties in very closely with layout & function. Signs,
symbols & artefacts are to be found on the interior and exterior of the store and are
visual communication tools (Bitner, 1992). Tombs and McColl-Kennedy (2003) also
highlighted that signs and symbols relate to design features in the store. As can be
seen there is crossover in literature of layout and design. Due to the blurring in the
literature of layout and design, there is very limited research examining signs and
symbols in relation to design of store but rather research focuses on branding. Bitner
(1992) herself suggested that sign, symbols & artefacts included the décor of the
store. The external layout and internal layout will be looked at next and how it
relates to the third dimension will be explored.
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3.3.5.1 External Layout
Davies and Tilley (2004, p. 10) suggested that many ‘consumer’s make their
purchasing decisions based on visual influences and that therefore getting the
message ‘right first time’ is of vital importance’. The first portrayal of a service
environment a consumer will see is the shopping front. Well-designed shopping
fronts are an attraction in themselves for consumers (Omar, 1999). Lea-Greenwood
(1998, p. 325) indicated that ‘if first impressions and appearances are important
indicators of store image, then store window display must play an important role in a
consumer’s decision on whether to enter a store or not’. Lea-Greenwood (1998, p.
325) further noted that ‘window displays, can act as an attractor or as an inhibitor
towards consumer patronage behaviour. It can be described as a vitally important
visual communication tool by the retailer…to the passing or potential consumer’.
Hasty and Reardon (1997, p. 264) concurred and indicated that the ‘main purpose of
windows is to attract attention and create an image to potential customers standing
outside’.
Davies (1998) indicated that product image and retail image have been shown to be
closely related in the context of buying behaviour. Products displayed in window
displays should be there to reinforce the retailer’s in store image, in order to attract
approach behaviours. Kent (2007, p. 736) suggested that ‘window displays have long
provided a consistent opportunity for creative practices in department stores,
although in other sectors and smaller stores, windows took on a more functional
purpose to present a selection of goods sold inside.’ It is important to note that
functionality plays a vital role in store design. Bitner (1992) refers to functionality of
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the layout and highlights the importance of functionality in determining the services
goals. Kent (2003, p. 136) illustrates the importance by suggesting that ‘design also
has functionality, to display merchandise effectively using visual images, to instil
trust, consistency and quality in the consumers mind’. Kent (2003, p. 136) also noted
that by the 1990s retail design become bolder and ‘store as design came to relate
consumer behavioural needs to functionality’.
3.3.5.2 Internal Layout
Improving store layout and design has become an essential component for retailers in
their pursuit for the ideal engaging atmosphere or for a more appropriate atmosphere
for the service offered. It is important to note that not all retailers want an engaging
atmosphere where consumers are encouraged to browse or stay. Some service
offerings hope to improve throughput, and do not wish for consumers to stay within
the environment. Fast food restaurants, airports and supermarkets are some examples
of services that may hope to achieve faster throughput. Kent (2003, p. 139) noted
that design has not been central to all retailers and that it is ‘more significant among
retailers who supply customers wants rather than their needs, where visual
appearances matter as much as functionality’. Many worldwide service stores, such
as Niketown, Apple and Claire’s Accessories, have gone this route by creating a
multi-sensory experience for their customers. The introduction of multi-sensory
experiences in stores has clearly been more evident in recent years (Kent, 2007). ‘As
spaces for consumption, play or enjoyment, these stores provide an important
medium for communication and interaction, as well as arenas for synthesising leisure
and consumption’ (Kent, 2007, p. 737).
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Kent (2007, p. 740) indicated that ‘depending on the client organisation and the
context of the particular retail sector, it [the retail design] may be characterised as a
largely creative, predominantly visual activity, in the case of so-called ‘boutique’
design, or a primarily organisational and spatial planning-focused activity, as is often
the case in large format food and multi-category store design’. Retailers can choose
from many formats of store layout in order to choose a format most suitable to the
service being offered. Lewison (1994, p. 289) indicated that ‘floor layouts are
extremely important because they strongly influence in-store patterns, shopping
atmosphere, shopping behaviour, and operational efficiency’. Choosing the correct
format will help in achieving the retailers aim of creating an engaging atmosphere or
one of fast turnover.
Baker et al. (2002) noted that a critical determinant towards the creation of a store
image is careful store layout. Careful layout of an environment helps people to find
their way through a store and also helps create an image appropriate to the store
(Spies et al., 1997). Bitner (1992) concurred and indicate that careful layout of the
environment can help consumers to orientate, find their way, learn to understand
signs, get the feeling of personal control and mastery. In a shopping context, store
layout represents the task environment (Iyer, 1989). Iyer (1989, p. 41) noted that ‘the
task environment, especially in a shopping context, acts as an external memory aid
and is a valuable bank of information’. As previously noted Mehrabian and Russell
(1984) introduced the notion of ‘information load’ to measure environmental
stimulation. Spies et al. (1997, p. 2) noted that ‘the information rate usually is higher
for new and unusual than for familiar stimuli’. Donovan and Rossiter (1984) noted
that high or low load environments can affect the emotional states of the consumer.
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Thus it is important to have the correct layout suitable to a stores offering. Levi and
Weitz (2007) note that it can be difficult to achieve this, as a suitable store layout
must balance many objectives - objectives that often conflict.
One of these conflicting objectives, noted by Spies et al. (1997, p. 2), is that ‘the
layout should be clear but not too simple, so that there is the possibility of surprise
and unexpectedness’. The retailer should entice the consumer to move around the
store. However, Levy and Weitz (2004, p. 591) indicate that ‘if the layout is too
complex, customers may find it difficult to locate the merchandise they are looking
for and decide not to patronize the store’. A certain in-between level is needed.
Stores will differ in the level that is appropriate to its image. For example, Niketown
and Apple use multi-sensory experience to balance function and visual appeal. This
enables them to keep the consumers interested and informed. Levi and Weitz (2004,
p. 591) indicate that a ‘trade-off between ease of finding merchandise and providing
a varied and interesting layout is determined by the needs of the consumer’. As
Vasquez and Bruce (2000) point out, store layout design is intended to make
shopping enjoyable for the customer.
Store layouts can play a key role not only in making shopping enjoyable for
customers by fulfilling their needs, but also in influencing their wants and
preferences (Simonson, 1999). They are an essential part of the retailers’ image due
to the impact they can have on changing shopping behaviour (Newman and Foxall,
2003, Newman and Patel, 2003). The interior and exterior of the store must be used
effectively together to enhance the space and function of the store in order to meet
the consumer’s needs and to further influence their preferences. The design should
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allow consumer’s easy access to the goods. Merrilees and Miller (2001) suggest that
store layout design is one of the most important determinants of store loyalty.
Levy and Weitz (2007, p. 495) suggest that ‘one method of encouraging exploration
is to present them [consumers] with a layout that facilities a specific traffic pattern.’
Mehrabian and Russell (1974) note that exploration is important in approach
behaviour. The layout retailers choose is usually determined by a number of factors,
market positioning, type of merchandise, size of store, cost of merchandise, security
(McGoldrick, 1990). Also, consumers may require different layouts depending on
the amount of time they have to spend, there mobility or even at various stages in the
business cycle (Newman and Foxall, 2003). Newman and Foxall (2003, p. 591)
noted that ‘gender differences in shopping styles can also justify quite specific
changes to fashion store formats and space allocation’.
According to established conventional retailing store layout theory, (Mason et al.,
1991, Ghosh, 1994, Lewison, 1994, Levy and Weitz, 2007), there are three major
types of store layout, namely grid, freeform and racetrack. Retailers may employ a
number of different variations or modifications of these three layout patterns in order
to achieve their ideal service layout. The grid layout is a rectangular arrangement of
long parallel aisles with merchandise on shelves and displays on both sides of the
aisles (Levy and Weitz, 2007). The common grid layout facilities routine and
planned shopping behaviour, this allows for flexibility and makes it easier for
consumers to identify and purchase their pre-selected products quickly (Lewison,
1994, Levy and Weitz, 2007). Levy and Weitz (2007, p. 496) note that ‘a grid layout
does not provide a visually exciting design, but is well suited for shopping trips’.
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Vrechopoulos et al. (2004, p. 14) agree and note that the grid layout ‘is widely
favoured by the grocery sector because the majority of customers visiting grocery
stores have planned their purchases’.
The second layout is called a free-form layout or a boutique layout (Levy and Weitz,
2007). However Ghosh (1994) and Lewison (1994) differentiated between the two
layouts indicating that the boutique layout is built around a particular theme whilst
free-form provides a range of displays. Levy and Weitz (2007, p. 497) indicate that
they are both ‘relaxing environments that facilitate shopping and browsing’. Levy
and Weitz (2007), Lewinson (1994) and Mason et al., (1991) all indicated that the
free-form layout is designed specifically for convenience and allows for customers to
move in any direction within the store easily. Levy and Weitz (2007) also note that it
can increase the time that consumers spend in the store. Vrechopoulos et al. (2004, p.
14) state that ‘it is mainly used by large department stores (e.g., fashion stores)’.
Kent (2007) noted that they are largely creative and predominantly visual layouts.
The race track also known as a loop is the third major type of layout (Levy and
Weitz, 2007). Vrechopoulos et al. (2004, p. 14) noted that ‘in the racetrack layout,
the sales floor is organized into individual, semi-separate areas, each built around a
particular shopping theme’. Due to the main aisle facilitating customer movement
through the store, the racetrack layout leads the customer along specific paths to visit
as many store areas or departments as possible (Lewison, 1994). This layout creates
an unusual and interesting shopping experience, thus creating and providing
entertainment for its customers (Mason et al., 1991, Lewison, 1994, Levi and Weitz,
2007).
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Davies and Tilley (2004) noted that of vital important to store layout is the use of
feature areas, special displays and shelf space. Feature areas and special displays, are
areas designed to attract the customers attention to additional purchasing
opportunities. They can include promotional aisles or displays, end use displays,
freestanding fixtures or the external window displays (Levy and Weitz, 2004).
Chevalier (1975, p. 426) suggested that ‘for the retailer, displays create in-store
excitement and increase the average amount purchased’. Lewison (1994) concurred
and noted that ‘special displays highlight merchandise that can attract customers’.
Sueraz (2005, p. 861) indicated that ‘from an academic perspective interest in shelf
layout appears to be weak’. This is not surprising as there is a lack of research in
layout (Spies et al., 1997).
Dréze et al. (1994) indicated that it is not easy to manipulate attention through better
space management; this is due to retail environments being very noisy, with
hundreds of competing stimuli vying for attention. However, Levi and Weitz (2004)
note that by providing an interesting store layout, the consumer will be more
attracted to roam throughout the shop. The layout, special displays or features of the
store will be constantly changing with promotions and with the seasons (Hasty and
Reardon, 1997).
One final element will be examined and it relates to Bitner’s (1992) third dimension
of signs, symbols and artefacts. Turley and Milliman (2000) suggest that overall
cleanliness forms part of the interior variables. Though not directly mentioned in
Bitner’s (1992) servicescape model, cleanliness cannot be overlooked within the
literature. Cleanliness is considered to be an important element in a service
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environment (Wakefield and Blodgett, 1996, Harris and Ezeh, 2008, Yavetz and
Gilboa, 2010, Miles et al., 2012).
Harris and Ezeh (2008, p. 49) noted that cleanliness can be defined as ‘the absence
of dirt (including dust, stains and bad smells)’. Of particular interest is the
relationship of cleanliness to the olfaction factor. As noted, the smell of pine or
disinfectant can give an impression of overall cleanliness in an environment. In their
review of the servicescape literature, Ezeh and Harris (2007) suggested that
cleanliness forms part of the ambience dimension and not Bitner’s (1992) third
dimension of signs, symbols and artefacts. This would correspond with Harris and
Ezeh (2008) who relate cleanliness to ‘bad smell’.
Though it is considered an important part of the service environment, there is
relatively little theoretical background in the services literature. Research relating to
sanitation and health in the environmental psychology literature has given insight to
the services literature. Harris and Ezeh (2008) cite Rosenquist (2005) in relating
cleanliness to Maslows hierarchy of needs.
Cleanliness is most often researched with other elements of the service environment.
Harris and Ezeh (2008) examine music, aroma and cleanliness as part of an
ambience factor; Wakefield and Blodgett (1996) and Kim and Moon (2009) examine
layout, aesthetics and cleanliness. Wakefield and Blodgett (1996) in their research on
sports arenas and casinos suggested that it was ‘especially in those situations in
which customers must spend several hours in the leisure setting’ that cleanliness is
significant to the service environment. Recently Vilnai-Yavetz and Gliboa (2010,
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p.228) focused their research on cleanliness and ‘found that the cleanliness of the
servicescape influenced customers’ feeling of pleasantness, customer trust in the
service, prestige attribution, and approach behaviors’.
Wakefield and Blodegett (1996) also highlight that services research has mainly
focused on service encounters that are short in duration, banks, insurance, fast-food
restaurants. Lack of research relating to the cleanliness factor on its own in the
services literature could be because of the type of services that are being examined.
More recently Barber and Scarcelli (2010) noted that few studies adequaetly measure
perceptions of cleanliness.
3.4 An Expanded Servicescape
Bitner’s (1992) servicescape model has been utilised in understanding the online
environments but further expansion of Bitner’s (1992) servicescape model has also
been explored in the offline environments. As noted the servicescape has said to
contain a social element (Tombs and McColl-Kennedy, 2003, Hightower Jr, 2010,
Rosenbaum and Massiah, 2011, Nguyen et al., 2012). It was Tombs and McColl-
Kennedy (2003) proposed the social-servicescape model that incorporated the
elements of purchase occasion, social density, displayed emotion of others,
customer’s affective responses and customer’s cognitive responses. In particular the
areas that differentiate the social-servicescape model from the servicescape model
are the direct inclusion of purchase intention, the social density and displayed
emotions of others.
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Purchase occasion relates to the type of service that is being consumed, utilitarian or
hedonic. Tombs and McColl-Kennedy (2003, p. 459) suggest that it is essential to
‘consider the occasion specific aspect of behaviour settings or context’. Mattila and
Wirtz (2006) related the concept of target arousal with customers purchase intentions
in order to gain a better understanding of how environmental stimuli can influence
behaviour. This would appear to tie in with Tombs and McColl-Kennedy (2003)
purchase occasion context.
The second aspect that Tombs and McColl Kennedy (2003) introduced to the
servicescape literature was the concept of social density. Though crowding had been
mentioned previously within the services literature (Machleit and Eroglu, 2000,
Turley and Milliman, 2000), there was a scarcity in research relating to the impact of
others in the service environments (Tombs and McColl-Kennedy, 2003). Tombs and
McColl-Kennedy (2003, p. 461) suggested that ‘social density itself creates affective
events through the unavoidable interactions with others’ The social servicescape is
said to relate to the interaction between people in the environment (Hightower et al.,
2002), this can relate to customer-customer interaction or employee-customer
interaction. Baker (1992) indicated customers form social relationships with focal
employees of a store and that affects both their perceptions and overall quality of the
store. At the heart of the SPC framework is the interaction between customers and
employees, which describe the satisfaction mirror. Though it may be overlooked,
Bitner (1992) also makes note in her model of employees and customers responses
and the social iterations between them. However Bitner (1992) does not include this
within her physical environmental dimensions.
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Brady and Cronin (2001) suggested that the physical elements of the servicescape
are where people share the same ambience, music or lighting while the social
servicescape relates to the human interaction (Hightower et al. 2002). Nguyen et al.
(2012, p. 269) point out that ‘these are thus distinctly different concepts’. The
servicescape relates to the environmental stimuli whist the social-servicescape
focusses on interactions with customers and how these interactions influence
customers. In incorporating the social dimension into their model, Tombs and
McColl-Kennedy (2003) fail to acknowledge the influence of the servicescape on
employees and their behaviours. However this is not surprising, as has been clearly
stated the research to date on servicescapes has primary been focussed on customers,
with employees being largely ignored within the literature. This research
acknowledges the social interactions between customers and employees but similarly
to Nguyen et al. (2012) considers it to be distinctly different concept to the
servicescape dimensions that have been discussed.
The third aspect that Tombs and McColl-McColl Kennedy (2003) discussed in their
model was the concept of displayed emotions of others. This relates to emotional
cognition which will be discussed in the next chapter.
3.5 Conclusion
As highlighted, retailers need to be continually evaluating their store atmosphere to
suit the changing market needs. It is thus important to consider each element of the
environmental stimuli; music, colour, lighting, olfaction, design, layout and
cleanliness, when deciding store environments as each one interact to help create the
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stores atmosphere. As Markin et al. (1976, p. 51) precisely point out ‘cues and
information that affect the customer’s perceptual processes, and hence his attitudes
and images, almost never come in single file. Instead they come in mixed bunches’.
As illustrated Bitner’s (1992) servicescape model focuses on the environmental
stimuli and considerable research has been carried out examining the many elements
of the environmental stimuli. The majority of research has focussed on music or
colour, with some research examining two elements of the servicescape in a single
study. Cleanliness appears to be the least researched of the environmental stimuli
(Vilnai-Yavets and Gilboa, 2010). The servicescape model has been used in
examining both online and offline service environments and was further developed
to incorporate a social component (Tombs and McColl-Kennedy, 2003). However,
this social component is considered to be separate to the physical environmental
stimuli.
To date the focus of the servicescape literature has been on customers. However
Parish et al. (2008) argue that employees spend considerable more time in the service
environment than customers. There has been some research relating to the impact of
the work environment on employees. This body of research literature is called work
climates and will be examined next.
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4 CHAPTER 4 Work Climate
We shape our buildings and afterwards they shape us,
Winston Churchill (1943)
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4.1 Introduction
Downey et al. (1975, p. 149) indicated that ‘the environment has long been
recognized as a source of influence on the individual's behavior’. This has clearly
been highlighted in chapter three in the servicescape literature. However the focus of
the servicescape literature is on customers rather than employees. The work climate
literature concentrates on employees and examines the work environment on various
levels. The literature is very broad and it is difficult to pinpoint what it is exactly
(Kuenzi and Schminke, 2009). Rousseau (1988, p. 140) suggested that ‘climate is a
content-free concept, denoting in a sense generic perceptions of the context in which
an individual behaves and responds’
It has been recognised that work climate literature attempts to examine the
perceptions of individuals regarding their work environment and how these
perceptions drive their attitudes and behaviours (Downey et al., 1975, Schneider,
2000, Dietz et al., 2004). Thus it clearly relates to the SOR paradigm discussed in
chapter two, this will be further discussed in this chapter. Early on the work climate
construct was acknowledged as being significant due to it taking an alternative
approach to the motivational theories that explained just ‘about everything that
happens to people at work’ (Schneider and Reichers, 1983, p. 20). It acknowledged
the important role that perceptions play (Schneider and Reichers, 1983), it focused
on aggregated or group level data to discover relationships (Schneider et al., 1980,
Schneider and Bartlett, 1970), it advanced the distinct clarification between
psychological climates and organisational climates (Schneider and Reichers, 1983)
and has led to the development of internal marketing (IM) in the services literature.
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Each of these different areas, the importance of perceptions, organisation and
psychological climates, aggregate or group level and IM will be looked at within this
chapter. The lack of research relating to employee environmental stimuli and the
impact it has on employees will also be examined at the end of this chapter. Firstly
internal marketing (IM) will be reviewed as it closely ties in with the Service Profit
Chain (SPC) discussed in chapter one.
4.2 Internal Marketing (IM)
Berry and Parasuraman (1992, p. 25) identified that IM related to ‘attracting,
developing, motivating and retaining qualified employees through job-products that
satisfy their needs…the philosophy of treating employees as customers... and the
strategy of shaping jobs to fit human needs’. Principally IM is the practical
application of the marketing philosophy, it is considered to be a managerial approach
to ensure customer satisfaction through first filling the needs of the employee (Berry
et al., 1976). Berry (2002, p. 68) suggested that ‘the stress placed on customer
satisfaction in external marketing is just as appropriate, just as necessary, in internal
marketing’. Within IM, employee are considered to be the ‘internal customers’ and
similarly to external customers, internal customers’ needs should be fulfilled to keep
them satisfied (Rust et al., 1996). It is grounded in the belief that having satisfied
employees will positively influence customer satisfaction (Gounaris, 2008). Implicit
in this assumption is that satisfied customers will become more loyal (Ahmed and
Rafiq, 2003).
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The employee satisfaction leading to customer satisfaction is the key concept within
the Service Profit Chain (SPC). The SPC foundations are within the realm of service
marketing, and the concept of IM was started in the service marketing literature
when service quality received considerable attention (Rafiq and Ahmed, 1998).
There is an inherent connection between IM and SPC, due to IM requiring a service
market orientation (Shiu and Yu, 2010). A service marketing orientation cannot be
present if employee commitment is absent; IM leads itself towards the service
market orientation through the commitment of employees (Varey, 1995). IM is
critical and fundamental in creating a service market orientation.
Greene et al. (1994) reflect that IM is the key to superior service, particular
important in the service sector and views employees as internal customers. However,
a key difficult that organisations have is how to implement IM. According to Ahmed
and Rafiq (2003, p.1186) ‘IM is an unusually slippery concept, easy to visualise and
yet exasperatingly difficult to operationalise’. Due to this difficulty IM is often left
neglected (Gounaris, 2008). Ueno (2010) reflected upon the different elements that
have been proposed to describe IM in order to manage and implement IM.
Throughout the literature on IM, authors have emphasised different elements of IM,
for example, Berry and Parasuraman (1992) suggested seven essentials of internal
marketing, Ahmed and Rafiq (2003, 2004) identified five elements of internal
marketing, whilst Ueno (2010) suggested that the elements can be summarised under
twelve headings; recruitment and selection, training, teamwork, empowerment,
performance measurement and reward system, communication, culture, top
management commitment, employee commitment and involvement, internal
marketing segmentation and targeting, internal marketing research and HR issues.
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Interestingly, Ueno (2010, p. 76) further stateed that these elements ‘play a role in
the development of a service culture’. Whilst Varey (1995, p.42) indicated that ‘this
[IM] is achieved through the development of a service climate’. The terms ‘culture’
and ‘climate’ have been used interchangeable with the literature, this will be
explored in more detail within this chapter.
‘In essence, internal marketing involves creating an organizational climate in
general, and job-products in particular, that lead to the right service personnel
performing the service in the right way’ (Berry, 2002, p. 69). Greene et al. (1994, p.
5) concurred and suggested that IM ‘can be defined as the promoting of the firm and
its product(s) or product lines to the firms employees’, its purpose to create a work
climate that employees are happy to stay in. Though IM is central to service
marketing Greene et al. (1994), Varey (1995) and Berry (2002) point out its purpose
is about creating a pleasant work environment for employees, thus it foundations can
be viewed within the work climate literature.
In order to satisfy their needs, employee’s perceptions of the work environment need
to be considered. Schulte et al. (2006, p. 645) recognised that ‘researchers have long
been interested in understanding employees’ perceptions of the work environment
and how these perceptions influence individuals’ work-related attitudes and
behaviours’. Rousseau (1988) proposed that in a sense, perceptions are simply
informational cues that are received or registered by an individual. Essentially the
climate literature has been viewed as the individuals perceptions of their social
setting of which that person takes part in (Rousseau, 1988). Rousseau (1988)
suggested that perceptions are a central concept to virtually all models of
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organisational behaviour that seek to explain behaviour, for example, motivation or
leadership. According to Schneider and Bowen (1993) employee’s perceptions and
valuations of the work climate should positively impact on customers. Yuan et al.
(2001, p. 50) concurred and reiterated that employee’s perceptions and valuations of
‘major work climate variables should impact positively on the implementation of
customer service programs’, thus reinforcing that employee behaviours affect
customer behaviours, a key premise in the SPC.
Yoon et al.’s (2001) research bridged the gap between the services literature and
work climates by examining the impact of a facet specific element of the work
climate literature, service climate, and how it impacts employee’s attitudinal and
behavioural responses. Another facet specific element of the work climate is the
physical environmental stimuli or as coined in the service marketing literature, the
servicescape. As highlighted in chapter three, the impact of the servicescape on
employee’s responses is not a central position in the marketing literature. Though not
central in the marketing literature, the work climate literature has suggested that the
work environmental stimuli are important in influencing employee responses and
‘servicescape’ is referred to as the ‘physical work climate’ for employees (Schneider,
1975, Schneider, 1987, Schneider, 2000, Schneider et al., 2009). Schneider et al.
(2000) suggested that the physical work environment can affect employees’ attitudes
and behaviours which in turn can affect customers. Furthermore in his SPC, Heskett
et al (1994) state that ‘workplace design’ forms part of the internal service quality.
Both employee and customer behaviours are considered to be of major importance to
both practitioners and academics alike (Churchill Jr. and Surprenant, 1982,
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Schneider, 1987, Bitner, 1990, Rust and Zahorik, 1993, Wakefield and Blodgett,
1996, Oliver, 1997, Babin and Boles, 1998, Schneider et al., 2000, Homburg and
Stock, 2004, Anselmsson, 2006, Harris and Ezeh, 2008, Kim and Moon, 2009,
Gazzoli et al., 2010) and as noted central to the IM literature is how employee
behaviour can impact customers. Work climates and where it has stemmed from will
be looked at next to gain a better understanding of employee perceptions.
4.3 Work Climates
For more than half a century, scholars have sought to understand organisational work
climates antecedents and consequences (Schneider and Reichers, 1983, Kuenzi and
Schminke, 2009). Early on Schneider (1975) defined work climates as the meaning
employees affix to the work related policies, practices, and procedures and the
behaviour that gets rewarded, supported or expected in the organisation. Since then
there has been many interpretations of what work climate is (Schneider et al., 2002).
Denison (1996) notes that there seems to be no limit to the work climate domain
other than the ability of theorists, researchers and practitioners to evoke new
adjectives to describe what work climate is. Hellriegal and Slocum Jr (1974, p. 256)
concurred and suggested that work climate refers to ‘a set of attributes which can be
perceived about a particular organisation and/or its subsystems, and that may be
induced from the way that organisation and/or its subsystems deal with their
members and environment’.
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Within the literature there have been many terms used for work climate including
organisational climate, organisational work climate or as was simply referred to in
the beginning ‘climate’ and these terms have all been used interchangeably within
the literature (Kuenzi and Schminke, 2009). See figure 4.1 for the evolution in the
literature. More recently organisational work climate or work climates has been the
term in use, with older research referring to the term as organisational climates or
climates. These terms will be used interchangeably here also due to the terms having
date relevance.
According to Schneider and Reichers (1983, p. 19) ‘organisational climate has been
a popular concept for theorizing and research for some time’. Organisational climate
research is grounded in the Gestalt psychology of Kurt Lewin (Schneider et al.,
2000) and Gestalt psychology stems from the Gestalt school of thought developed
out of Max Wertheimer’s study of perceptual phenomena (Chaplin and Krawiec,
1960). Max Wertheimer along with Kurt Koffka and Wolfgang Köhler, were the
three founders of the school. The meaning of Gestalt is ‘form’ or ‘the organisation
of’ (Chaplin and Krawiec, 1960) and the major contribution of Gestalt psychology
was its importance on ‘the organisation of’ perceptions.
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Climate (Lewin 1939-1960s)
Organisational Climates (1970’s-1980s)
Organisational Work Climate (1990s-Today)
Work Climate (Today)
Facet Specific Climates (Schneider 1975) Global Climates (Lewin 1939)

Is the dominant approach to studying
Approaches to the study of climate:

(a) The perceptual measurement of individual attributes,
(b) The perceptual measurement of organizational attributes
(c) The multiple measurement of organizational attributes combing
perceptual and more ‘objective’ measurements
(Hellriegel and Slocum Jr, 1974, James and Jones, 1974)
Psychological Climate (James and Jones, 1974) Organisational Climate (James and Jones, 1974)
Figure 4.1 Evolution of the Climate Literature

Source: Author
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The organisation of perceptions is where the whole is something special and not
defined by the sum of its parts (Schneider, 1975). The critical notion of ‘the whole’
or ‘the Gestalt’ means ‘that individual elements of perception are formed into wholes
that represent more than the simple sum of the specifics of the individual elements.
A table, for example, is more than the sum of four small pieces of wood and one
large piece of wood’ (Schneider et al., 2000, p. 22). Another example would be
atmospherics, which is more than just the sum of the components of music, colour,
lighting or design.
The Gestalt school of thought has had major influences on the work climate
literature. Two major principles to stem from the Gestalt school of thought into the
climate literature were that the task of the perceiver is to a) apprehend the order
which objectively exists in the world and b) to create new order by a process of
integration through thought (Chaplin and Krawiec, 1960, Schneider, 1975). Our
environment is assumed to have order and the perceiver’s task is to discover that
order (Schneider, 1975). The perceiver is compelled to find order in their
environment and is driven to create order (Schneider, 1975). A preliminary
definition of climate was that climate perceptions represent a meaningful
understanding of order in the perceiver’s world based on their surrounding
environment (Schneider, 2000). It also looks at how these perceptions drive
individual’s behaviour and attitudes (Downey et al., 1975, Dietz et al., 2004). In
defining climates Schneider and Reichers (1983) suggested that organisational
climate is a perceptual phenomenon. The influence and the important role of
perceptions in understanding behaviour at work is acknowledged throughout the
work climates literature. Since the early research on work climates, the majority of
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researchers have treated climates as perceptual in nature (James and Jones, 1974,
Schneider, 1975, 2000, Kuenzi and Schminke, 2009).
In the beginning of perceptual research, using the terminology of Mehrabian and
Russell (1974), the emphasis was on the Stimuli (S) (Chaplin and Krawiec, 1960).
This turned towards an S-R orientation, where responses (R) became an important
variable. Later on the role of learning, motivation and emotion became important
determinants of perceptual research (Chaplin and Krawiec, 1960). Hellreigel and
Slocum Jr (1974, p. 257) concurred and explained ‘that factors such as attitude,
values, and motives are widely recognised as playing an important role in the
perceptual process’. Chaplin and Krawiec (1960, p. 70) observed that ‘the S-R
orientation of the traditional psychophysicists became an S-O-R orientation’ with the
O being the Organism aspect. As identified in chapter two, Mehrabian and Russell
(1974) attempted to present an integrated framework that provided a broad overview
of the environment. They recommended an S-O-R paradigm, which suggested that
the (S) component is the environmental stimulus; the (O) component is the
emotional states and the (R) is the approach-avoidance responses. The S-O-R
paradigm has its basis in environmental psychology literature.
Lewin (1951) point out that it was Lewin et al. (1939) that introduced the concept of
climate into the social psychology literature. They used the terms ‘social climate’
and ‘social atmosphere’ interchangeably within their research. Schulte et al. (2006b)
explained that early researchers used the terms social climate or atmosphere
frequently. Schneider et al. (2000) concurred and stressed that Likert (1961) as well
as Katz and Kahn (1978) emphasised that the conditions (climate and atmosphere)
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created in the work place can have major implications on employees. Interestingly,
as noted in the servicescape chapter, Kotler (1973) coined the term ‘atmospherics’ to
describe the intentional control and manipulation of environmental cues in the
service environment. However the term climate rather than atmosphere became the
more dominant term in the climate literature. Similarly to early environmental
psychology, early organisational climate concerned itself with the environment and
the environments impact on human behaviour, specifically employee behaviour in
the workplace. In this early organisational climate literature, Kurt Lewin’s field
theory or the ‘Lewinian perspective’ played an important role. Lewin expressed his
basic formula in terms of a simple equation
B= f(P,E),
where, B=Behaviour, E = Environment, and P= Person
Lewin’s (1951) field theory produced the formula stating that behaviour is a function
of the person and environment. From the time of Lewin’s (1951) established
formula, a person’s environment as a determinant of their behaviour has been the
cornerstone of the climate literature (Glick, 1985). Denison (1996, p. 634) coincided
and remarked that ‘according to the Lewinian field theory, the social world can be
neatly divided into Bs, Ps, and Es’. Thus, in order to study a phenomenon such as
organizational climate (or culture) from Lewin's perspective, the person must, by
definition, be analytically separate from the social context.’ Denison (1996) further
illustrated that this perspective clarifies the approach taken in the climate literature.
That is that the person, the employees, are separate from the environment, they work
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in the environment but they do not create their environment. It looks at how
employees perceive their work environment and how the work environment impacts
on those within it.
Burke et al. (2002) suggested that there are three primary perspectives on the
significance of the work environment perceptions that have emerged in the climate
literature, a) general psychological climate (James and James, 1989) b) multiple
stakeholder (Burke et al., 1992), and c) social constructionist or ‘climate for
something’ (Schneider and Reichers, 1983). Burke et al. (2002) identify that these
three perspectives vary with their theoretical bases of employee work environment
perceptions. Firstly, the general psychological climate refers to the variables
designed to assess work environments (James and James, 1989). This generalized
climate looks at individual’s perceptions of their work environment characteristics.
James and James (1989) viewed psychological climate perceptions as partial
functions of personal value systems. Burke et al. (2002, p. 328) concurred and
indicated that ‘the general psychological climate perspective explicitly emphasizes
the importance of personal values (e.g., clarity, responsibility, support, and friendly
social relations) in the appraisal of work environment attributes.’ Personal values
imply what is important to the individual and provide the schemas or groupings to
appraise the work environment in terms of its relevance to the individual (Burke et
al., 2002). Personal value can be defined as ‘that which a person wants or seeks to
obtain’ because it is ‘that which one regards as conducive to one’s welfare’ (Locke,
1976, p. 1304). James et al. (2008, p. 8) suggested that ‘in sum, personal values
produce the schemas employed to cognitively appraise work environment attributes
in terms of their significance to the individual’.
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James et al. (2008) explain that the purpose of James and James’s (1989) research
was to attempt to tie climate to personal value in order to build a case that a single
higher order factor underlies measurements of psychological climate. James and
James (1989) research suggested that climate psychology has a set of variables that
are readily identifiable for appraising work environments in terms of groupings.
They highlighted in their research that there was a limited number of generalized
climate dimensions for explaining work environment. According to James and James
(1989, p. 740) the four psychological climates (PC) that have ‘demonstrated factorial
invariance in the diverse work environments are a) Role Stress and Lack of
Harmony, b) Leader, Support and Facilitation, c) Job Challenge and Autonomy, and
d) Workgroup Cooperation, Friendliness, and Warmth’. These factors tie in with
Locke’s (1976) proposed four latent factors. Locke (1976) suggested that the
following latent variables underlie most important personal, work-related values.
These latent factors are (1) desires for clarity, harmony, and justice; (2) desires for
challenge, independence, and responsibility; (3) desires for work facilitation,
support, and recognition; and (4) desires for warm and friendly social relations.
Psychological climate-general (PCg) is the latent psychological common
denominator for the four factors. This general factor suggests that individuals
employ a much simpler appraisal of their environment then was suggested
previously (James et al., 2008). ‘Stated simply, people respond to work
environments in terms of how they perceive these environments, and the key
substantive concern of perception is the degree to which individuals perceive
themselves as being personally benefited as opposed to being personally harmed
(hindered) by their presence in the environment’ (James and James,1989, p. 748).
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The second perspective is looking at the multiple stakeholders. It is an extension of
the single higher order factor model by James and James (1989). Burke et al. (1992)
extended James and James’ (1989) work and concluded that, in addition to personal
values, values that are exposed to individuals in work by the organisation are likely
to form additional schemas or groups for making sense of one’s environment. Burke
et al. (1992) proposed that first order psychological climate factors reflect both
personal values and also organisational values towards other stakeholders.
Stakeholders are a group of individuals within or outside an organisation, such as
employees, customers, suppliers or contractors that have a stake in the organisation
and that can be affected by its actions (Burke et al., 2002). Similarly to the
psychological climate perspective, the multiple stakeholder perspective calls for the
use of generalised dimensions for assessing individuals appraisals. The multiple
stakeholder perspective also places greater emphasis on the use of stakeholder –
specific dimensions unlike the social constructivist view which looks for a climate
for something (Burke et al., 2002). It was Schneider (1975) who suggested the
notion of a ‘climate for something’. Initially the climate literature had attempted to
identify the person’s environment on a broad global level. Schneider (1975)
proposed that it should be narrowed down and be facet specific. The global climate
and facet-specific climates will be looked in more detail next.
4.3.1 Global Verses Facet-Specific Climates
In the beginning the climate literature appeared to be primarily researched as a broad
global conceptualisation of work climates and its influence on employees (James and
Jones, 1974, Kuenzi and Schminke, 2009). The ‘early work climate was viewed as a
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molar construct that would allow researchers to examine broad based determinants
of employee behaviour’ (Kuenzi and Schminke, 2009, p. 636). Litwin and Stringer
(1968, p. 38) suggested that the global climate model ‘hopes to provide a
quantification, or, rather, a diagram of the total situational variables-a diagram that is
relevant to the analysis and prediction of the total effects of the environment on
groups of individuals’. Essentially, climate research attempted to understand the total
or global situational influences in organisations and their effects on individuals
(Kuenzi and Schminke, 2009).
This focus on climate as a global construct had many difficulties. One of the biggest
difficulties was that there existed no consensus on how to define ‘global climate’
(James and Jones, 1974). Lack of definition of what climates were led to some
ambiguity and vagueness of the construct (Kuenzi and Schminke, 2009). Schneider
(2000) also pointed out that, due to lack of clarification as what constituted ‘climate’,
there was a lack of a theoretical base and global climate dimensions were developed
and added to the literature without clear rationale. Furthermore it was difficult to
provide clear guidelines for measurement; for example there were a lack of
appropriate procedures for aggregating individual climate perceptions to the group or
organisational level (Glick, 1985).
Schneider (1975) acknowledged in his review article that organisational climate was
so vast and global that he proposed the idea that climate have a focus or be facet-
specific. Schneider et al. (1998) recommended that due to the fact that many climates
could exist simultaneously within an organisation, climate research needed to be a
climate for ‘something’ (Schneider, 1975). It needed to be related to particular
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aspects of the organisational context such as justice (Naumann and Bennett, 2000),
safety (Zohar, 2000), ethical (Victor and Cullen, 1988), service (Chunag and
Schneider, 2002) and the physical work climate (which can also be referened to as
environmental stimuli) (Davis, 1984). In particular the ‘service climate’ and
‘physical work climate’ can be closely related to services marketing literature.
‘Much of the work that has been done on service employees has concerned the
creation of what has been called a ‘service climate’’ (Chuang and Scheinder, 2002,
p. 71). Schneider (1975) proposed the notion of facet-specific climates to deal with
the confusion and lack of clarity of the definition and conceptual issues with the
global climate constructs.
In more recent research and studies, the many aspects of work climate have generally
been dealt with on a facet-specific basis, with each area falling into a different
literature (Kuenzi and Schminke, 2009), for example the service climate falling
within the services marketing literature. Kuenzi and Schminke (2009, p. 637) noted
that ‘this recent focus on facet-specific climates has increased our understanding of
work climates and their influence on employee and organization outcomes’. There
are different approaches to studying climates, Organisational and Psychological
climates and they will be looked at next.
4.3.2 Organisational and Psychological Climates
Rousseau (1988) suggested that debates over the meaning of perceptual differences
led to different ‘types’ of climate emerging. James and Jones (1974) concurred and
highlighted that researchers were initially confused as to whether to treat work
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climate as an organisational attribute, which was a unit level construct or an
individual attribute, which was viewed as an individual-level construct (Kuenzi and
Schminke, 2009). Both Hellriegal and Slocum Jr (1974) and James and Jones (1974)
helped to clarify the situation by building a consensus around three distinct
approaches to the study of climate: ‘(a) the perceptual measurement of individual
attributes, (b) the perceptual measurement of organizational attributes, and (c) the
multiple measurement of organizational attributes combing perceptual and more
‘objective’ measurements’ (Denison, 1996, p. 623). These perspectives were
separated into two views, organisational climate and psychological climate (James
and Jones, 1974). The first perspective is characterised as the psychological climate
and the second and third perspective are characterised as the organisational climate
(Denison, 1996).
Over the years there have been attempts to differentiate the two climate views. James
and Jones (1974, p. 1100) specified that ‘organizational climate was viewed as a
situationally determined psychological process in which organizational climate
variables were considered to be either causative or moderator factors of performance
and attitude’. Organisational climate represents a shared or summary perception that
people attach to particular characteristics of the work place (Schneider and Reichers,
1983, Ostroff, 1993). Denison (1996) concurred and noted that organisational
climate concerned itself with the perceptual measurement of organisational
attributes. When perceptions of a work unit’s employees are aggregated they reflect
organisational climate (Kuenzi and Schminke, 2009). Kuenzi and Schminke (2009,
p.638) proposed that ‘the origins of organizational climate lie in individual
perceptions; however, it is a property of the unit’. When employees within a unit
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agree on their perceptions of the work place, unit level or organisational climate is
said to exist (Schulte et al., 2006b). It was viewed as a logical extension of the
psychological climate (James et al., 2008).
On the other hand psychological climate was seen to be the study of the perceptual
measurement of individual attributes (Glick, 1985, Denison, 1996, Burke et al.,
2002). It is based on perceptions of individual aspects of the work environment
(James and Jones, 1974, Ostroff, 1993). Schulte et al. (2006, p. 646) agreed and
proposed that ‘individuals’ own perceptions of the work environment constitute
psychological climate at the individual level of analysis’. These perceptions are
psychological and abstract in nature and are not treated as organisational descriptions
but rather as information as to how the individual organise their understanding of the
environment (Rousseau, 1988). These perceptions need not agree with those of other
individuals in the same environment (Rousseau, 1988). According to Burke et al.
(2002) the facet specific perspective is the dominant approach to the study of
psychological climates.
Schulte et al. (2006) identified that past studies have tended to focus on
psychological climate or on organisational climate. Though they have been separated
in the literature and in research, psychological and organisational climates are
conceptually related to each other (Schulte et al., 2006). According to Schulte et al.
(2006) the relationship between psychological and organisational climate can be
described as compositional, as they both refer to the same context but describe
different phenomena at different levels of analysis, individual and unit. The
important requirement is that these psychological climates are shared in order to
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make the inference that they are organisational climates (James et al., 2008). James
and Jones (1974, p. 1109) concur and illustrated that ‘the distinction between
organisational climate and psychological climate permits the assessment of the
differential importance of these two sets of variables in predicting both individual
attitudes and behaviour and performances on an organisational or group level.’ Most
recently James et al. (2008) concurred and suggested that the products of aggregates
of psychological climate are typically referred to as organizational climate.
Although conceptually related, Glick (1985) suggested that it is important to
differentiate between organisational climate and psychological climate because they
may differ empirically. ‘Organisational climate connotes an organizational unit of
theory, it does not refer to the climate of an individual, workgroup, occupation,
department or job’ (Glick, 1985, p. 602). Ostroff (1993, p. 58) concurred and
suggested that ‘organizational climate is the appropriate level of analysis for
environment factors’.
4.3.3 Aggregate Level
Climate research takes an alternative approach to the motivational theories. In doing
so, climate research has provided researchers with a focus on multiple levels of
analysis (Schneider and Reichers, 1983). Instead of looking at research at an
individual level, climate research could focus on aggregated or group level data to
discover relationships between clusters of perceptions and organisationally relevant
outcomes (Schneider et al., 1980, Schneider and Reichers, 1983). Rousseau (1988)
suggested that ‘aggregate’, similarly to psychological and organisational climates, is
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a type of climate. Aggregated climates are suggested to being individual perceptions
that are averaged out at some hierarchical level, for example workgroup, department
or division (Rousseau, 1988). Similarly to psychological climate, aggregated
climates are thought to intervene between situational factors and individual
responses (Joyce and Slocum Jr, 1984). Although aggregated climate derives from
individual level data reflecting within unit agreement the meaning of the aggregate
climate is not well established in the literature (Rousseau, 1988).
To date the literature has mainly focussed on the above mentioned climates of
psychology and organisational climates. Although not directly recognised by other
researchers as a type of climate, aggregate level has played an important role in the
influence of past research. Schneider and Reichers (1983, p.21) highlighted that
‘while the importance of group membership and group influences on individual and
organizational functioning has never been denied by researchers in this field, group
phenomena have not, perhaps, received the attention they deserve in explaining
behavior at work.’ Rousseau (1988, p. 143) proposed that ‘aggregate climates are
constructed based on membership of individuals in some identifiable unit of the
formal organisation and within-unit agreement or consensus in perceptions’. Joyce
and Slocum Jr (1984) concurred and suggested that aggregated climates are based on
groupings of individuals that identify themselves within a formal work group and
that are unanimous in their perceptions.
Within past research aggregated climates have been recognized based on empirically
observed between unit differences (Rousseau, 1988). ‘These differences are
attributed to real situational differences that lead members within a unit to agree
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more with each other regarding their perceptions than they do with members of other
units’ (Rousseau, 1988, p.143). Rousseau (1988) also pointed out that the etiology,
theoretical implications, value and meaning associated with aggregate climate are
not well established in the literature. This could be why considerable research has
focussed on psychological or organisational climate.
4.3.4 Culture and Climate
In their research, Katz and Kahn (1978) use the term climate and culture
interchangeably in their perspective on the social psychology of the organisation.
This is not surprising as both climates and culture deal with the ways that individuals
attempt to understand their environments (Kuenzi and Schminke, 2009). Reichers
and Schneider (1990) concur and note that both climate and culture deal with the
way members of an organisation make sense of their environment. ‘These sense
making attempts manifest themselves as shared meanings that form the basis of
action’ (Reichers and Schneider, 1990, p. 29). ‘Furthermore, both are learned
through interaction among group members’ (Kuenzi and Schminke, 2009, p. 638).
Within the literature there exists similarities between the two constructs and it has
been suggested that they are related to one another. Schneider (2000) suggests that
they are ‘siblings’ and that the two constructs are usefully linked, practically and
conceptually.
Reichers and Schneider (1990) noted that culture exists at a higher level of thought
than climate and that climate is a manifestation of culture (Schein, 2010). In
examining culture, Schein (2010) suggested three levels of Culture; artifacts,
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espoused beliefs & values and basic underlying assumptions. However, Schein
(2010, p. 24) highlights that his terminology of ‘artifacts’ can be considered ‘the
climate of the group’ and are the visiable or feelable structures in place. These
visiable features are the environmental stimuli that employees can see and is further
clarified in section 4.5 as the facet specific climate of employee environmental
stimuli. .
Denison (1996) remarked that although it is clear that culture and climate are very
distinct perspectives on organisational environments, it is a lot less unclear if they
actually examine distinct organisational phenomena. The two perspectives often
overlap and Denison (1996) presents a summary of the similarities between the two
literatures as per Table 4.1
However there are several reasons to view the two constructs as two separate and
distinct constructs (Kuenzi and Schminke, 2009). James et al. (2008) identified that
‘the development of literatures on climate and culture initially proceeded
independently’. The climate literature has a longer history than culture and each
stems from different academic roots (Kuenzi and Schminke, 2009). Rousseau (1988)
concurred and remarked that climate is a mature concept in organisational research.
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Areas of Convergence Examples of Convergence
Definition of the Both focus on the internal social psychological
Phenomenon environment as a holistic, collectively defined social
context
Central Theoretical Issues Shared dilemma: context is created by interaction,
but context determines interaction.
Definition of domain varies greatly by individual
theorist
-Dynamics between the whole and the part
-Multiple layers of analysis
-Dimensions vs. holistic analysis
-Subcultures vs. unitary culture
Content & Substance High overlap between the dimensions studied by
quantitative culture researcher and earlier studies by
climate researchers
Epistemology & Methods Recent emergence of quantitative culture studies and
qualitative climate studies
Theoretical Foundations Roots of culture research are in social
constructionism. Roots of climate research are in
Lewinian field theory. Many recent studies have
crossed or combined these traditions
Table 4.1 Areas of Convergence in the Culture and Climate Literature
Source: Denison (1996, p. 627)
The climate literature has been around for a considerably longer period than culture
(Denison 1996). The definition of what constitutes culture was more concrete than
climate in its early stages. In the beginning of the climate literature there were a wide
variety of classifications for climate. Reichers and Schneider (1990) pointed out that
the definition of climate was left unattended to for many years. It was not till the
major introduction of the concept in the late 1960s that Litwin and Stringer (1968)
focused on defining the concept of climate.
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Hellriegal and Slocum Jr, (1974, p. 256) definition of work climate was ‘a set of
attributes which can be perceived about a particular organisation and/or its
subsystems, and that may be induced from the way that organisation and/or its
subsystems deal with their members and environment’. For almost thirty years the
climate concept was left open to debate (Reichers and Schneider, 1990). On the other
hand, the construct of culture was defined at its very beginning. ‘Culture researchers
have devoted numerous articles and books to explorations of the nature of concept,
to its definition, and to discussions of what it is and is not ‘in’ the concept of culture
(for example, norms, values, shared meaning and/or rituals, myths, artefacts,
languages, assumptions, and so on)’(Reichers and Schneider, 1990, p. 18).
By examining their history and definitions it can clearly be acknowledged that the
two concepts have fundamentally different roots. Denison (1996, p. 634) noted that
‘the climate literature has its roots in the field theory of Kurt Lewin (1951), whereas
the culture literature is grounded in the symbolic interaction and social construction
perspectives developed by Mead (1934) and Berger and Luckmann (1966)’. Within
the roots of climate literature, organisational effectiveness was an important aspect to
understand and the climate construct helped to understand why some organisations
were more effective than others (Reichers and Schneider, 1990). ‘In contrast,
effectiveness is not an important aspect to anthropology, especially in comparative or
cultural anthropology; description is the issue’ (Reichers and Schneider, 1990, p.
20). The study of culture concerns itself with comparisons not with the effectiveness
of an organisation.
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Furthermore, the social construction perspective and the symbolic interaction
perspective are in contrast to the Lewinian perspective as they suggest that the
environment and the person cannot be analytically separated and that the ‘members
of the social systems are best regarded as being agents and subjects simultaneously’
(Denison, 1996, p. 635). The Lewinian perspective, developed from Kurt Lewin
(1951) field theory, is distinct from the cultural perspective of social construction as
it separates the person from the social environment (Edwards, 2008). Climate stems
from the Gestalt school of thought, where perceptions play a vital role, where as
culture stems from the social construct. ‘These distinct ancestries have affected both
the study and measurement of the climate and culture’ literatures (Kuenzi and
Schminke, 2009, p. 638).
Denison (1996) formed a table to highlight the main differences between the climate
and culture literatures. Table 4.2 presents a summary of the contrasts that exist in
epistemology, point of view, methodology, level of analysis, temporal orientation,
theoretical foundations, and disciplinary base of the culture and climate perspectives.
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Difference Culture Literature Climate Literature
Epistemology Contextualized and Comparative & normative
Idiographic
Point of View Emic (native point of Etic (researcher’s
view) viewpoint)
Methodology Qualitative field Quantitative survey data
observations
Level of Analysis Underlying values and Surface-level
Assumptions manifestation
Temporal orientation Historical evaluation A historical snapshot
Theoretical Foundations Social construction; Lewinian field theory
Critical theory
Discipline Sociology & anthropology Psychology
Table 4.2 Areas of Difference in the Culture and Climate Literature
Source: Denison (1996, p.625)
As previously examined, psychological climate was the study of the perceptual
measurement of individual attributes and is based on perceptions of individual
aspects of the work (James and Jones, 1974, Glick, 1985, Denison, 1996, Burke et
al., 2002). On the other hand organisational climate represents a shared perception
that people attach to particular aspects of the work place (Schneider and Reichers,
1983, Ostroff, 1993, Denison, 1996). However, as James et al (2008, p.20)
importantly clarified ‘climate remains a property of the individuals regardless of the
agreement or disagreement among individuals perceptions’. When there is agreement
among individuals within a work unit then individual perceptions are shared and can
be grouped togather to characterise a work unit, which is called organisational
climate, but the perceptions still remain the property of the individual regardless if
they are grouped together or not (James, 1982). Thus aggregation does not change
the definition of the climate construct (James et al., 2008).
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On the other hand, culture is defined by the system values and shared behavioural
expectations in an organisation (Katz and Kahn, 1978, James et al., 2008). ‘The
system values and system norms are often viewed as the products of group dynamic,
namely interactions among systems members designed to collectively develop
(create, enact, evolve) a set of socially constructed schemas for making sense out of
the function of the system’ (James et al., 2008, p. 21, see, Katz and Kahn, 1978, for a
review). Similarly to psychological climate, these socially constructed groupings
form a basis for identifying what it is that is significant about the system (James et
al., 2008). James et al. (2008, p. 21) point out that ‘unlike those related to
psychological climate, however, beliefs pertaining to system functioning are not
designed to reflect individuals personal valuations’. What differentiates climate from
culture is that climate reflects an individual’s perception or orientation and is a
property of the individual at both psychological level and organisational level,
whereas culture reflects a system-level orientation and is part of the system (James et
al., 2008). According to James et al. (2008, p. 20), ‘this individual-versus-system
orientation is a key to set climate and culture as two distinct constructs.’ The
predominant climate contributions that have relationships with the service marketing
literature will be looked at next.
4.4 Climate Contributions
4.4.1 Attraction-Selection-Attrition Model (ASA)
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Schneider and his colleagues, (Schneider, 1978, Schneider, 1987, Schneider and
Reichers, 1983, Reichers, 1987) explored the issue of where organisational climates
came from through what they called an ‘Attraction-Selection-Attrition’ (ASA)
process. The ASA framework is based on the assumption that people within an
organisation become more similar in their disposition over time and due to this they
become more homogenous in attitude (Schneider et al., 1995). It was Schneider
(1978) who proposed a person-oriented model of organisational behaviour and from
this he further proposed that organisations become defined by the people in them as a
natural outcome of ASA cycle (Schneider, 1987).
The ASA model was first referred to as the selection-attraction-attrition (SAA)
model and later became the ASA model (Schneider and Reichers, 1983). The ASA
model ‘outlines a framework for understanding organisational behavior that
integrates both individual and organisational theories’ (Schneider et al., 1995, p.
748). The framework proposes that the outcome of three related processes;
attraction, selection and attrition determine the types of people that can be found in
an organisation, which consequently defines the nature of the organisation, its
structure and its climate (Schneider et al., 1995, Schneider, 1987). Schneider
proposed that organisation processes, such as selection into the organisation and the
individual’s attraction to an organisation and the attrition from the organisation,
combine to produce relatively similar memberships in any one organisation
(Schneider and Reichers, 1983, Schneider, 1987, Schneider et al., 1995). The
attraction process concerns an individual’s preference for a particular organisation
based on their personal characteristics or goals and the fit of these characteristics or
goals with that of the organisation (Schneider et al., 1995). The next step is the
selection process and this can involve formal or informal selection procedures used
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by the organisation to choose employees that they find to be most suited to the
organisations goals or attributes (Schneider et al., 1995). Schneider et al. (1995, p.
749) indicate that the final step is the attrition process which ‘refers to the idea that
people will leave an organization they do not fit’.
The concept of ASA can also be related to Internal Marketing (IM). As Berry and
Parasuraman (1992) pointed out IM relates to the attraction, retention, motivation
and development of staff. The prime purpose of IM is to create a work climate that
employee are satisfied to work in (Greene et al. 1994). According to Schenider and
Reichers (1983, p. 27) members of the organisation therefore have ‘similar
perceptions and attach similar meanings to organizational events because the
members themselves are in some ways similar to each other’. Wangenheim et al.
(2007, p. 691) concurred and proposed that ‘this is because individuals in a group or
organisation share certain experiences: an intolerable supervisor and poor working
conditions, or a very respectful supervisor and positive working conditions’.
Schneider et al. (1995) suggested that organisational behaviour research supports this
homogeneity hypothesis. Therefore the development of a positive and satisfactory
climate enables employees to be better aware and more responsive to customer
goals, whilst negative climates hinder customer satisfaction. This corresponds with
the IM and SPC that satisfied employees will influence customer satisfaction.
According to Wangenheim et al. (2007, p. 691) ‘job satisfaction should be related to
customer satisfaction due to the homogeneity of the working climate within a group
of employees’. Positive working environments increase job satisfaction affecting
customer satisfaction, whilst a negative working climate will ultimately decrease
both employee and customer satisfaction (Wangenheim et al., 2007). Wangenheim et
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al. (2007) suggest that the ASA framework therefore proposes an existence of a
service climate in the organisation.
Denison (1996, p. 624) explain that ‘this process [ASA] interestingly portrays the
dynamics of climate formation in terms of membership changes coupled with
socialization processes’. The ASA framework proposes that persons make
environments, which is in contrast to the Lewin’s (1951) P-E model, which forms a
fundamental cornerstone of the climate literature. As noted, the P-E model suggests
that the person is separate from the environment. Whereas the ASA framework
promoted the idea that ‘the situation is not independent of the people in the setting;
the situation is the people there behaving as they do’ (Schneider et al., 1995, p. 751).
Schneider (1987) suggests that Kurt Lewin may have overstated the case when he
proposed that behaviour is a function of person. Denison (1996) acknowledged that
it was during the 1980’s, when there was growing influence of the culture
perceptive, that research into where organisational climates came from appeared
through the process of the ASA framework. In discussing the ASA framework,
Schneider et al. (1995) updated the framework and suggest that the people in the
organisation determine structure, process and culture. The ASA framework
originated from the climate literature but according to Schneider et al. (1995) it plays
a role in determining the culture of the organisation. This shift towards a culture
perspective may have been due to the large presence of cultural research that was
taking place during the 1980s.
However as Denison (1996) observed culture and climate are two distinct concepts
and should be treated as such. Overall the ASA framework suggests that the work
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climate can affect employee satisfaction, which in turn affects customer satisfaction,
thus giving support to the Service Profit Chain (SPC). Emotional contagion, which
will be looked at next, gives an alternative approach to understanding employee
satisfaction affecting customer satisfaction.
4.4.2 Emotional Contagion
The concept of emotional contagion has been used in the marketing research to
explain the link between employee satisfaction and customer satisfaction (Tombs
and McColl-Kennedy, 2003, Homburg and Stock, 2004, Wangenheim et al., 2007).
It attempts to explain how emotions are transmitted between people (Barger and
Grandey, 2006). Howard and Gengler (2001, p. 189) explained that emotional
contagion ‘refers to someone (hereafter the receiver) catching the emotion being
experienced by another (hereafter the sender), wherein the emotion of the receiver
converges with that of the sender’.
There are two main foci of the emotional contagion hypothesis, firstly it suggests
‘that some processes are responsible for emotional contagion and secondly, it
suggests that there are strong individual differences in the way that some people are
susceptible to emotional contagion or are able to transmit their emotions to others’
(Verbeke, 1997, p. 620). Verbeke (1997, p. 620) found that ‘in interactions, people
automatically and continually tend to mimic and synchronise their movements with
the facial expressions, voices, postures movements, and the instrumental behaviours
of others’. This process of copying others is called primitive emotional contagion
(Barger and Grandey, 2006). The process of primitive emotional contagion refers to
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how emotions infect others via an automatic process which involves two
mechanisms, feedback and mimicry (Barger and Grandey, 2006). According to
Hatfield et al. (1994) mimicry is the tendency to imitate others expressions or
behaviours, whilst feedback is the response mechanism for the observed expression
or behaviour. Within the emotional contagion hypothesis the main focus is on the
facial expressions of others (Verbeke, 1997).
Emotional contagion theory suggests that there are transmitters and infection-prone
people. Transmitters are those that transmit their emotions on to others. According to
Hatfield et al. (1994, p. 138) transmitters are ‘charismatic, colorful, and entertaining;
had often taught, lectured, or worked as a salesperson ... [they] scored high on
dominance, affiliation and exhibition’. The controlling ability of the transmitter is
not a conscious process but rather a automatic response or implicit one (Verbeke,
1997). The infection prone people or catchers are those that are susceptible to the
emotions of others. They focus attention on other peoples’ emotions that are around
them (Hatfield et al., 1994).
Due to their susceptibility, infection-prone people tend to make those that they are
communicating to, for example a customer, feel relaxed and the receiver, customer,
is likely to communicate more information back to the infection-prone person
(Verbeke, 1997). Similarly to transmitters, infection prone people are unaware of
their attentional involvement towards those around them. Verbeke (1997) suggested
that infection-prone people can make themselves miserable due to them being
susceptible to negative emotions of others around them, and emotionally negative
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individuals like to express how they are feeling and are drawn towards those that are
empathetic.
Hatfield et al. (1994) highlighted that although some people are susceptible and
others transmitters of emotions, the two categories are not mutually exclusive. Based
on Hatfield et al. (1994) work, Verbeke (1997) suggested a possible fourfold
typology as per table 4.3. Hatfield et al. (1994) suggested that there exists four
separate types of individuals within the emotional contagion research; charismatics,
empathetics, expansives and blands.
High Ability to Infect Low Ability to Infect

(High Primitive Control) (Low Primitive Control)
High Capability to be Infected Charismatics (CH) Empathetics (EM)
(High Primitive Empathy)
Low Capability to be Infected
(Low Primitive Empathy) Expansives (EX) Blands (BL)
Table 4.3 The Typology of People Based upon Their Emotional Constitution
Source: Verbeke (1997, p. 622)
Charismatics are able to infect the emotions of those around them and are easily
infected by emotions of others. Empathetics are susceptible to emotions, they catch
others emotions but are not easily able to infect others with their own emotions
(Hatfield et al., 1994). The third group are called expansive, they are able to infect
others but have no empathy towards those that they are infecting. Expansives may
display inappropriate behaviours, for example making a joke at a funeral (Verbeke,
1997). The last group are called blands and are unable to infect others and are not
infected by those emotions of others around them (Hatfield et al., 1994).
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Howard and Gengler (2001, p. 198) found that ‘when senders were happy and
receivers liked the senders, receiver emotions converged with the happy emotion of
senders, and a positive attitudinal bias occurred.’ Thus in a service context, when
employees are satisfied this satisfaction can be transferred over to the customer.
Brown and Lam (2008, p. 245) noted that emotional cognition suggests ‘that affect
transfer alone (i.e exclusive of quality or value considerations) is sufficient to
account for ES [employee satisfaction] -customer response relationships’. However
emotional cognition may be limited in its scope in explaining the employee-customer
satisfaction link. In describing their social-servicescape model Tombs and McColl-
Kennedy (2003) incorporate the concept of emotional cognition and purchase
occasion. They suggest ‘customers interact with each other, either consciously or
subconsciously, their affective state is likely to be influenced by the displayed
emotions of their fellow customers’ and that ‘purchase occasion will determine the
spatial layout of the customers, their sociability and whether they identify as part of a
larger group’ (Tombs and McColl-Kennedy, 2003, p. 462).
The Service Profit Chain (SPC) framework further extends the scope of the
emotional cognition, by suggesting that satisfied employees are more productive,
provide better service quality and perceived value, leading to higher customer
satisfaction. Brown and Lam (2008, p. 245) clarified that ‘while this view is not
incompatible with emotional contagion, its scope is greater, as it suggests a
cumulative perceptions of service quality and value are foundations of ES [employee
satisfaction] customer response relationships’.
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4.5 Facet Specific: Employee Environmental Stimuli
‘Disregarding the well-documented effects of the physical work environment on
people’s behaviour leaves behavioural variance unexplained and the relationships
between environmental variables and measures of interest to researchers and
practitioners (e.g staff turnover, satisfaction and commitment) unexplored.’
(Carlopio, 1996, p. 330)
Although early researchers argued that atmospherics or climates created in work
places have significant consequences on employee behaviours (Newman et al., 1966,
Schneider, 1975, Davis, 1984), the main focus of research relating to work climates
relates to psychological climate, organisational climate or global climate. In more
recent years, there has been particular emphasis on many facet specific climate
dimensions such as climate for safety or climate for service (Schulte et al., 2006a,
Sowinski et al., 2008). Babin and Boles (1996) mention the retail work environment
and suggest it is sometimes called climate, though they examined supportive work
environments relating to supervisor support, role stress and did not relate their
research to environmental stimuli.
This diverse range of research has provided an increased understanding of work
climates in certain facet specific climates. However, one facet specific climate that
has been overlooked in the literature is how physical environmental stimuli, as
suggested by Davis (1984), impacts employees. Davis (1984) suggested that physical
environmental stimuli consisted of physical structure, physical stimuli and symbolic
artefacts. These are almost identical to Bitner’s (1992) three dimensions of the
servicescape that have been thoroughly examined in chapter three.
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Early on, Newman (1966) highlighted the need for research into music and Davis
(1984, p. 282) advocated for research ‘to examine how the physical environment can
be modified to support more efficient behaviour’. Carlopio (1996, p. 330) reinforced
the need for research by advocating that ‘many theories of behaviour at work fail to
consider the effects of the physical environment on employee behaviour and
attitudes.’ More recently, Parish et al. (2008) highlighted that the physical
environment or servicescape is often considered less important by managers than
other motivational variables.
Brief and Weiss (2002, p. 292) highlighted that research on ‘affective reactions to
the physical work environments is small and eclectic, but interesting’. Oldham and
colleagues are some of the few researchers who examined elements of environmental
stimuli impacting employees (Oldham and Rotchford, 1983, Oldham et al., 1991,
Oldham et al. 1995). However, their research is very limited in terms of how they
examine environmental stimuli, but also in what they are measuring. They examine
darkness, density or spatial density, accessibility and music (Oldham and Rotchford,
1983, Oldham et al., 1991, Oldham et al., 1995). Their research largely ignores the
three dimensions of the physical work environment as proposed by Davis (1984) and
they do not examine service environments where customers will also be present.
Most recently, Skandrani (2011, p. 52) highlighted the considerable lack of empirical
research, ‘despite the accumulated body of knowledge, little interest has been
directed to how these store atmospherics might affect employees’. Skandrani et al.
(2011) further note that despite the widely recognised importance of the IM and
growing interest of the employee-customer satisfaction performance relationship,
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research on environmental stimuli impacting employees is astonishingly scant. They
carried out qualitative research examining different environmental stimuli and found
music to be of particular significance for employees. Furthermore as noted in the
SPC ‘workplace design’ form part of the internal service quality for employee
(Heskett et al. 1994).
4.6 Conclusion
The focus of this research is on the environmental stimuli impacting employees and
customers in a service environment. As can be seen, elements of both the work
climate literature and the services marketing literature have their foundations in the
SOR paradigm. However, each literature has a separate focus; work climate relates
to employees environmental stimuli, emotional cognition and Lewin’s (1951) field
theory; whereas services marketing literature relates to the customer environmental
stimuli or servicescape, the SPC and satisfaction mirror. Due to each having a unique
focus it was essential to include aspects from both literatures in designing the
proposed model, as its foundations are based on the SOR paradigm. Furthermore, the
SPC specifies the relationships between employees and customers in a service
setting. The next chapter will discuss how the model was formed by incorporating
elements from each of the areas discussed within the four literature chapters.
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5 CHAPTER 5 Methodology
‘A primary objective of virtually all research is to make sense of some aspect of the
world experiences’
(Bagozzi and Yi, 2012, p. 12)
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5.1 Research Methodology
Having examined the extant literatures, the methodology, to address the research aim
and objectives, can now be considered. This chapter specifies the research process
that was taken for the research. In outlining the research process, the aims and
objectives are proposed, hypotheses constructed, model re-presented and research
framework assembled. A predominantly positivistic approach is taken for the data
collection stage. Before examining the quantitative data collection stage, the
managerial discussions leading to the development of the questionnaire will be
discussed. An analysis of the pilot questionnaire is discussed in order to gain an
understanding of the issues underlying the final questionnaire. The chapter will close
with a description of the two step approach of analysis proposed by Anderson and
Gerbing (1988) for using Structural Equation Modelling (SEM).
5.2 The Research Process
Before outlining the research process it is appropriate to specify the philosophical
assumption being taken as it will constitute the foundations for the research.
According to Aubert-Gamet (1997, p. 27) ‘the environmental impacts of physical
settings on consumer behaviour have been analysed using the positivist paradigm’.
In their study on emotions and satisfaction, Bigne et al. (2005) followed a positivist
paradigm. Donaldson (1996) indicated that a positivist approach is informed by
empirical research and is built open from the data. Based on past research on the
impact of environmental stimuli both on users’ behaviour and their feelings, a
predominantly positivist approach was taken for this research
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The research process can take many formats. Many authors develop their own
process and stages of research, examples in the extant literature reviewed include
(Donovan and Rossiter, 1982, Donovan et al., 1994, Babin et al., 2003, Paulin et al.,
2006, Kim and Moon, 2009, Schneider et al., 2009). However, authors mostly follow
a similar process of steps. Firstly and most importantly they have a problem
definition and then they develop a research design or plan of action, determine their
sample frame, collect the data, analyse the data and present the findings
academically and sometimes tailor them for a managerial perspective. Hu and Jasper
(2010) in their study on store image and its effects on customers, Schneider et al.’s
(2009) research on service climate and customer satisfaction and Lariviére’s (2008)
study on the SPC all followed similar steps in their research process.
The first key step that any researcher should take is to find out what the research is
hoping to achieve (Saunders et al., 1997). Thus the problem definition identifies
what needs to be addressed and gives the research a focus. The review of the
literature has identified three significant gaps in need of attention and these will be
summarised next.
Firstly Homburg et al. (2009) noted that, despite the widespread acceptance of many
of the links in the SPC, further research examining both customer and employee
responses and the impact on financial performance is essential to the development of
the literature. Traditionally the links in the SPC have been looked at in isolation
(Anderson et al., 1994, Anderson et al., 2004, Brown and Lam, 2008). A limited set
of authors have examined more than one link in the chain (Hallowell, 1996,
Loveman, 1998, Gelade and Young, 2005, Chi and Gursoy, 2009).
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Secondly with regard to the servicescape literature, examination of many elements of
the environmental stimuli such as music, colour, lighting, layout in any one study is
rare (Reimer and Kuehn, 2005, Ezeh and Harris, 2007). Past research has mainly
examined only single components in isolation such as music (Herrington and
Capella, 1994, Dubé et al., 1995, Herrington and Capella, 1996, Morin et al., 2007),
lighting (Areni and Kim, 1994, Cuttle and Brandston, 1995, Summers and Herbert,
2001), olfaction (Spangenberg et al., 1996), colour (Bellizzi and Hite, 1992), with
some authors looking at two components (Mattila and Wirtz, 2001, Spangenberg et
al., 2005).
Thirdly, past research has been predominantly customer focused. Hoffman and
Turley (2002, p. 33) strongly stated that ‘clearly the interaction of the inanimate
environment, contact personnel and other customers is an important area of study’.
An apparent area that has been under researched is the impact of environmental
stimuli on employees. The impact of the environmental stimuli on employees is not
fully understood (Bitner, 1992, Parish et al., 2008, Skandrani et al., 2011). Parish et
al. (2008, p. 236) noted that ‘a facilities design is important not only because of its
direct effect on customers’ experience but also because of its possible indirect effect
due to the building impact on service providers’. Han and Ryu (2009, p. 488)
suggested that despite the indications that the tangible environment impacts on
customer satisfaction and the formation of customer loyalty there is ‘surprisingly
little research in the service literature’. This research will therefore combine the
servicescape literature and the climate literature with the SPC literature.
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5.3 The Research Framework
As noted, over the past few years there has been a growing literature within the
services marketing and the organisational behaviour literature implying that
environmental stimuli impact both the customer and the employee (Schneider and
Bowen, 1985, Wiley, 1991, Bitner, 1992, Schneider et al., 2000, Homburg and
Stock, 2004, Kim and Moon, 2009, Schneider et al., 2009). Bigné et al. (2005)
indicated that early studies focused on understanding this influencing behaviour from
a theoretical standpoint.
The implications of previous research suggest that organisations need to be acutely
aware of how they manage a wide range of internal design issues because they
appear to affect the perceptions, emotional state and behavioural intentions of
employees and the customers. As explained in chapter two, it was Mehrabian and
Russell (1974) that suggested SOR as a broad theoretical environmental psychology
model to explain the interactions of individuals, their emotions and their
environment. This model has been used extensively within the literature (Bitner,
1992, Mano and Oliver, 1993, Donovan et al., 1994, Spies et al., 1997, Turley and
Milliman, 2000, Mattila and Wirtz, 2001, Newman, 2007, Parish et al., 2008,
Rosenbaum and Massiah, 2011).
Figure 5.1 presents the theoretical model proposed for this research. It has been
developed from the building blocks of previous research streams. This model clearly
acknowledges the fundamentals of the Mehrabian and Russell (1974) broad
environmental psychological framework. In acknowledging the SOR framework this
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research draws from three main literatures, service marketing, environmental
psychology and the climate literature. Specifically this research examines aspects of
the servicescape model and the SPC. These graphical models isolate variables and
suggest that relationships exist between them.
In the proposed theoretical model, elements of the environmental stimuli, the S
component, affect both the customers and employees emotional response, the O
component, resulting in employee loyalty or customer loyalty, the R component,
with the final factor in the proposed model being the financial performance. Each
link within the proposed model will be discussed and the hypotheses within the
model are developed. First the research aim and objectives will be examined.
5.4 Research Aim and Objectives
5.4.1 Research Aim
The aim of this research is to investigate the impact of environmental stimuli on the
emotional responses of both the customer and the employee, the implications that
these stimuli have on their behavioural responses and the subsequent effect on the
financial performance.
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Environmental Stimuli Response Behaviour
(S) (O) (R)
Employee Satisfaction
Employee
Loyalty
Environmental
Stimuli Pleasure Service Quality Financial
(Customer & Performance
Arousal
L5
Employee)
Dominance
Customer
Loyalty
L3 Attitudinal
Customer Satisfaction Customer

Loyalty
Behavioural
Figure 5.1 Proposed Model
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According to Davis (1984) and Hoffman and Turley (2002) environmental stimuli
can be broken down into three dimensions, facility exterior, facility interior and other
tangibles. Shostack (1977) and Davis (1984) remarked that these three dimensions
are controllable. Based on previous research (Bitner, 1992, Wakefield and Blodgett,
1996a, Schneider et al., 1998, Ezeh and Harris, 2007, Newman, 2007, Parish et al.,
2008, Kim and Moon, 2009, Miles et al., 2012) it is assumed that if the elements of
the environmental stimuli are controllable, such as the music played, layout chosen
and colour used, that then human behaviour can be influenced. As noted the focus of
this research is to examine the impact of the environmental stimuli on the SPC. In
order to achieve this, the following objectives have been developed along with the
links within the proposed model.
In the literature chapters, the terms atmospherics, servicescape, environmental
stimuli, service environments, physical environment, physical work environment,
work climate and climate has been used in different circumstances throughout the
different streams of literature. Mainly, servicescape relates to customers and physical
work climate relates to employees. Overall the term environmental stimuli will be
used in explaining the objectives. However, where authors have specifically used
their own terminology, their term will be used in the discussion of the objectives.
5.4.2 Research Objective 1
The first objective is to explore the links in the SPC. This subsection will be
organised by the links in the chain.
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Link: Employee Satisfaction-Employee Loyalty
The SPC suggested that employee satisfaction with the job will lead to employees
staying in their job for longer (Heskett et al., 1997, Parish et al., 2008). Rust et al.
(1996) agreed and noted that satisfaction in the job resulted in intention to remain in
the job and that these intentions translate into behaviour, employee retention or
loyalty. Hesket et al. (1994) indicated that loyalty is driven by employee satisfaction.
From this the following hypothesis was developed
H1 Employee Satisfaction positively influences Employee Loyalty
Link: Employee Satisfaction-Customer Satisfaction
Silvestro (2002, p. 33) noted that ‘in the service literature, awareness of the ways in
which employees can directly impact upon customer perceptions of the service has
led to general acceptance of what Heskett et al. (1997) refer to as the ‘satisfaction
mirror’’. This implies that employee satisfaction is reflected in terms of customer
satisfaction (Heskett et al., 1997). Pugh (2001, p. 1020) suggested that ‘customers
when exposed to the emotional displays of employees, experience corresponding
changes in their own affective state’. The work climate literature also stresses the
concept of emotional cognition which parallels the ‘satisfaction mirror’ concept.
Howard and Gengler (2001) and Barger and Grandey (2006) indicated that
emotional cognition attempts to explain how emotions are transmitted between
people.
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Along with the general acceptance in the literature for the link between employee
satisfaction and customer satisfaction, there has been some empirical support (Wiley,
1991, Schneider and Bowen, 1993). Homburg and Stock (2004) found that
employee’s job satisfaction positively influenced customer satisfaction in a B2B
context. The following hypothesis was developed,
H2 Employee Satisfaction positively influences Customer Satisfaction
Link: Employee Loyalty- Customer Satisfaction
Rust et al. (1996) noted that employees who stay in their jobs develop relationships
with customers and that these relationships lay a foundation for a cycle of positive
interactions between employees and customers (Schlesinger and Heskett, 1991,
Heskett et al., 1994, Wallace and De Chernatony, 2009). ‘Employees who perceive
relationships with customers provide better service. Customers who receive better
service express fewer complaints and thereby create fewer problems for employees.
Employees in turn react more favourably to encounters with customers. These
reactions result in better service which again leads to higher customer satisfaction’
(Rust et al., 1996, p.63).
Rust et al. (1996) concured with Heskett et al.’s (1994, p. 167) proposed linkage that
‘low employee turnover was found to be linked closely to high customer
satisfaction’. Wallace and De Chernatony (2009) agreed and suggested that
committed employees stay with the organisation and their retention results in
customer satisfaction. The following hypothesis was proposed.
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H3 Employee Loyalty positively influences Customer Satisfaction
Link: Employee Loyalty- Service Quality
As noted a direct link between employee loyalty and customer satisfaction has been
generally accepted within the literature. However service quality has been noted to
precede customer satisfaction. According to Hesket et al. (1997) and Loveman
(1998) employee loyalty impacts service quality. Empirical evidence to support a
link between employees experience with their work environment and customers
evaluations of the service quality have been found (Schneider and Bowen, 1985,
Schneider et al., 1980, Schneider et al., 1998, Schneider, 1990, Schneider et al.,
2000). Dean (2004) indicated that it is the positive environment for employees that
can lead to perceived service quality for the customer. In his research on the SPC
Loveman (1998) did not measure service quality due to data constraints but
suggested employee loyalty played a vital role in service quality. The following
hypothesis was developed.
H4 Employee Loyalty positively influences Service Quality
Link: Service Quality- Customer Satisfaction
Bitner (1990) noted that originally it was proposed that customer satisfaction
preceded service quality. However, due to past empirical and conceptual work it is
now widely accepted that service quality precedes customer satisfaction (Anderson
et al., 1994, Heskett et al., 1997, Cronin Jr et al., 2000, Brady and Robertson, 2001,
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Pollack, 2009). Lazarus (1982) suggested in his appraisal-emotional response
framework that cognitive appraisal occurs prior to affective appraisal. As previously
discussed service quality is considered to be cognitively orientated whilst customer
satisfaction is considered to be both cognitive and affective.
In line with the idea that the more cognitive construct (service quality) should
precede the more affective (customer satisfaction) construct (Brady and Robertson,
2001) and from the SPC line of thought (Heskett et al., 1994), the following
hypothesis was developed.
H5 Service Quality positively influences Customer Satisfaction
Employee perceptions of service quality are not being examined as objective one
relates to examining the links in the SPC. The SPC suggests that service quality
influences customer satisfaction and does not suggest that service quality influences
employee satisfaction. Therefore the employee perspective of service quality is not
being examined.
Link: Customer Satisfaction-Customer Loyalty
It is generally acknowledged and accepted that customers who are satisfied with a
service will return and repeat purchase. There is an overlap between the servicescape
literature and the SPC framework relating to satisfaction and loyalty. The
servicescape literature suggests that the physical environment affects satisfaction
which can influence desire to return. Donovan and Rossiter (1982) found empirical
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evidence that customers Pleasure feeling, derived from the physical environment,
influences customers likelihood to return. Wakefield and Blodgett (1996, p. 52)
noted that ‘satisfaction with the servicescape was found to have a positive effect on
customers’ repatronage intentions’. Whilst Heskett et al. (1994) SPC framework
proposed that customer satisfaction drives customer loyalty. In his study Hallowell
(1996) found empirical research supporting the relationship between customer
satisfaction and customer loyalty. Both literatures suggest that satisfaction effects
loyalty. Both attitudinal loyalty and behavioural loyalty will be examined. From this
the following hypotheses were developed.
H6a Customer Satisfaction positively influences Customer Loyalty Attitudinal
H6b Customer Satisfaction positively influences Customer Loyalty Behavioural
Link: Customer Loyalty-Financial Performance
Gelade and Young (2005, p. 5) noted that within the literature there is a ‘general
conception of a link between customer satisfaction and financial performance’.
Wiley (1991, p. 117) concurred and noted that ‘from a marketing perspective,
providing high levels of customer satisfaction is a key mechanism for the guarantee
of customer retention’ and from a ‘financial performance perspective achieving high
levels of customer satisfaction is seen as a natural and logical means for increasing’
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Hallowell (1996) found, through quantitative research, that customer satisfaction is
related to profit through customer loyalty. Anderson and Mittel (2000) pointed out
that customers become profitable over time by becoming loyal to the store. However,
Heskett et al. (1994) provided little empirical research and Silvestro and Cross
(2000) suggested that more research is needed. Schneider et al. (2009) also indicated
that the role of customer satisfaction as a mediator between service climates and
financial outcomes has not been formally proposed or tested. The following
hypotheses were developed.
H7a Customer Loyalty Attitudinal positively influences Financial Performance
H7b Customer Loyalty Behavioural positively influences Financial Performance
Link: Employee Loyalty-Financial Performance
Chi and Gursoy (2009) indicated that similar to the link between customers and
financial performance, the same holds true for employees. Retention of employees
achieves a better financial performance due to a decrease in costs (Green and
Tsitsianis, 2005, Hsu and Wang, 2008). However, findings of this link have been
mixed. Chi and Gursoy (2009) found no direct link but indicated that the relationship
between employee loyalty and financial performance is mediated by customer
satisfaction. Loveman (1998) indicated that further research is needed to examine the
relationship. From the literature the following hypothesis was proposed.
H8 Employee Loyalty positively influences Financial Performance
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The second objective is to evaluate the relationship between the environmental
stimuli and service quality.
Within the literature elements of the environmental stimuli have been incorporated
into the service quality dimension (Brady and Cronin Jr, 2001, Pollack, 2009).
However Baker et al. (1994), Reimer and Kuehn (2005) and Hooper et al. (2013)
found support that environmental stimuli are an antecedent to service quality. There
is considerable support for the association between environmental stimuli and
service quality. Bitner (1992), Spangenberg et al. (1996) and Reimer and Kuehn
(2005) all considered the influence of the environmental stimuli on customers’
evaluations. Due to services being intangible the customer often needs to be present,
and the surrounding environmental stimuli can have a significant influence on
perceptions of the overall quality of the service encounter (Bitner, 1992). The
following hypothesis was developed:
H9 Environmental Stimuli positively influences Service Quality
The third objective is to assess the link between environmental stimuli and the
emotional responses of customers and employees. This is broken into two aspects.
The first is the link between environmental stimuli and customer
satisfaction/employee satisfaction, which contains an affective component. The
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second concerns emotions themselves and their links to environmental stimuli and
customer satisfaction/employee satisfaction.
Environmental Stimuli-Customer Satisfaction/Employee Satisfaction
Bitner’s (1992) framework suggested that the servicescape can affect customer
responses, such as satisfaction. However the empirical evidence on the servicescape,
as a whole, impacting responses is surprisingly scant though a number of authors
have attempted to examine the link between elements of the environmental stimuli
and customer satisfaction (Wakefield and Blodgett, 1994, Wakefield and Blodgett,
1996, Hightower et al., 2002, Wu and Liang, 2009). The first of these was Wakefield
and Blodgett (1994) who conducted an experimental study on students’ perceived
satisfaction of a sports stadium. This study was limited due to students’ satisfaction
with the servicescape being measured rather than developing a measure for the
servicescape itself. In their later study, Wakefield and Blodgett (1996) addressed this
limitation and developed a measure for the servicescape and conducted field
research.
However, they did not look at the entire servicescape but rather the layout, facility
aesthetics, seating, electronic equipment and cleanliness of the environment. They
found that servicescapes are important determinants of customer behavioural
intentions. Hightower et al. (2002, p. 703) concured and found that the ‘servicescape
does have a significant influence on consumer behavioral intentions’. They also
noted that the physical environment has a positive and significant influence on
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positive affect, which they found to be directly related to behavioural intentions. The
following hypothesis was developed:
H10a Environmental Stimuli positively influences Customer Satisfaction
Similarly to customer responses, Bitner (1992) suggested that the servicescape can
affect employee responses, such as employee satisfaction. Davis (1984) indicated
that organisations’ facilities can also influence employee behaviour. Similarly to
customer satisfaction, employee satisfaction can be influenced by the environmental
stimuli. Parish et al. (2008) found that the design of the facility in which employees
work influence their job satisfaction. The following hypothesis was developed:
H10b Environmental Stimuli positively influences Employee Satisfaction
Environmental Stimuli- PAD
Previous research assumes that emotions can be caused by exposure to specific
environmental stimuli, which may result in a behavioural response. As noted, this is
based on the Mehrabian and Russell (1974) model which focuses on three emotional
states: Pleasure, Arousal and Dominance (Mehrabian and Russell, 1974). In their
research, Donovan and Rossiter (1982) found that the atmosphere can create a
pleasurable environment for the customer and Wakefield and Blodgett (1994) found
that the environmental stimuli directly and positively affect excitement. Similarly, in
a later study of a sporting venue Hightower et al. (2002) found support for the
relationship between the physical environment and customers emotional responses.
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Spies et al (1997) found that customers’ mood improved in a pleasing environment
and deteriorated in the less pleasant environment. Aubert-Gamet (1997, p. 27)
indicated that the components of the environmental stimuli ‘affect the emotional
state of individuals and therefore their behaviour’.
Based on the environmental psychology literature, Kim and Moon’s (2009) research
explored the relationship between environmental stimuli, customers’ emotions and
behavioural intentions. In particular, they highlighted the role Pleasure-feeling
played in understanding the impact of environmental stimuli on behavioural
intentions. Kim and Moon (2009) found that environmental stimuli directly
influences customer emotions. In particular, they indicated that the environmental
stimuli would positively affect customer’s pleasure feeling. Kim and Moon (2009)
suggested that further research should be carried out examining all three affective
components, Pleasure, Arousal and Dominance. From the literature this link in the
model is identified as environmental stimuli affecting emotional responses of both
employees and customers. The following hypotheses were developed:
H11a Environmental Stimuli positively influences the Emotional Response of
Pleasure for Customers/Employees
H11b Environmental Stimuli positively influences the Emotional Response of
Arousal for Customers/Employees
H11c Environmental Stimuli positively influences the Emotional Response of
Dominance for Customers/Employees
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PAD-Customer Satisfaction
Wirtz and Bateson (1999) suggested that Pleasure played an important role in
understanding satisfaction. Bigné et al. (2005) agreed and proposed that the Pleasure
and Arousal dimension positively influenced visitor satisfaction. From their findings
Foxall and Greenley (1999) showed that Pleasure, Arousal and Dominance explain
customer’s verbal expressions of approach-avoidance. Due to its lack of usage within
the literature, Foxall and Greenley (1999) highlighted the role of the Dominance
dimension. More recently Newman (2007) found that Dominance is beneficial as a
measure of affective responses. In line with previous research, that emotion
positively impacts satisfaction, the following hypotheses were developed:
H12a The Pleasure dimension positively influences Customer Satisfaction.
H12b The Arousal dimension positively influences Customer Satisfaction.
H12c The Dominance dimension positively influences Customer Satisfaction.
PAD-Employee Satisfaction
Bagozzi et al. (1999) noted that we know much less about the role of emotions in
marketing behaviour compared with behavioural decision research and what we do
know is confined to consumer behaviour, as opposed to the behaviour of salespeople
or managers. Foxall and Greenley (1999) pointed out that the failure to find a role for
Dominance might be due to the narrow range of customer settings used in past
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studies. It could also be that employees may have more control over their
environment than customers and that Dominance may be a more important
dimension for understanding employee satisfaction. It would appear in the literature
that the Dominance dimension has not been examined in understanding employee
satisfaction. Based on the customer satisfaction literature and the need to understand
emotions and the role they play in employee satisfaction, the following hypotheses
were developed;
H13a The Pleasure dimension positively influences Employee Satisfaction.
H13b The Arousal dimension positively influences Employee Satisfaction.
H13c The Dominance dimension positively influences Employee Satisfaction.
5.5 Control Variables
The observed variables are represented in the model as controls. For this research
three types of questionnaires were administered. Similarly to Kantabutra (2011) and
Lichtenstein et al. (2010), separate questionnaires were used for the managers,
employees and customers. All three types of respondents were asked age and gender,
in order to gauge the demographic characteristics of the sample. Similar to previous
research, employees were asked time in job and full/part time position (Carlopio,
1996, Gelade and Young, 2005) and the managers of the store were asked all control
variables. Size of store was controlled for because smaller stores may provide the
opportunity for more intimate relationships (Dietz et al., 2004). Location was
controlled for because different dynamics could occur in rural or urban locations
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(Dietz et al., 2004). Date of last refurbishment is a particularly important control
variable as it relates to the environmental stimuli and this is an important variable in
the model. Figure 5.2 shows the model with the hypotheses and control variables.
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(S) (O) (R)
Employee Satisfaction H1 Employee

H10b Loyalty
H8
H13a, H13b, H13c H4
H9
Environmental
Stimuli Service Quality Financial
H11a Pleasure
(Customer & Performance
Employee) H11b Arousal H2
H11c Dominance H5 Customer H7a

Loyalty
H3 Attitudinal H7b
L3
H12a, H12b, H12c H6a
H10a Customer
Customer Satisfaction
H6b Loyalty Control Variables
Behavioural
Full time/Part time, Length
Figure 5.2 Proposed Model with Hypothesis and Controls of time Working, Store
Location, Date of Last
Refurbishment, Size of Store,
Age/Gender of Employee,
225 Day of the Week
5.6 Research Plan
As previously mentioned, data was collected from customers, employees and
managers in order to meet the aim and objectives of this research. Objective one
relates to the SPC and linking employee and customer responses. In order to meet
this objective dyadic data was collected. This is where data is collected from both
sides of a dyad (Homburg and Stock, 2004). In order to collect dyadic data and for
all the research objectives to be investigated, a field study was chosen. Research
collected in real settings are called field studies and many authors in this area have
chosen a field study approach for collecting data (Yalch and Spangenberg, 1993,
Herrington and Capella, 1996, Foxall and Greanley, 1999, Hightower et al., 2002,
Bigné et al., 2005, Newman, 2007). This differs from laboratory research where the
environment is an artificial setting constructed by the researcher to their desired set
of conditions which is a feature of studies in this area also (Wirtz et al., 2000, Gilboa
and Rafaeli, 2003, Mattila and Wirtz, 2006).
In order to ensure that valuable data is collected from the field research, a research
plan was drawn up. This allowed for data to be screened ensuring data was useful,
reliable and valid for testing the relationships. Babin et al. (2003) defined their
population, picked a sample size, choose a sample, and decided on a technique to use
to collect the data. Donovan et al. (1994), Chebat et al. (2001), Reimer and Kuehn,
(2005) and Homburg et al. (2009) all followed a similar research plan. This research
plan provided a clear strategy and was used in this research.
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5.6.1 Field Study
Essential to this research was that all respondents were asked to fill out the
questionnaire within the store, or as close as possible to the store after existing. This
ensured that the respondents experienced the service environment of actual market
conditions. Wakefield and Blodgett (1996, p. 50) indicated that ‘subjects are in a
position to observe and experience the servicescape directly and to offer more valid
responses’ if surveyed inside the service encounter. In conducting field research for
this study it is important that the respondents have the stores atmosphere fresh in
their minds. Donovan and Rossiter (1982, p. 35) indicated that ‘store atmosphere
effects are basically emotional states that are difficult to recall’. Bigné et al. (2005)
concured and pointed out that it is the stimulus itself that evokes emotions.
To overcome the difficulty of trying to recall the stores atmosphere Machleit and
Eroglu (2000) collected the data immediately after the customer had finished their
shopping. This process was similar to Bigné et al. (2005) study on tourism attraction
and on Wakefield and Blodgett (1996) study on consumer’s behavioural intentions in
leisure service experiences. Customers were asked to fill out the questionnaire
immediately after finishing their shopping. Employees were asked to fill out the
questionnaire at the end of their shift on the same day that the customers filled out
their questionnaire. By filling out the questionnaire on the same day both
respondents have the ability to experience the same environmental stimuli that
creates the atmosphere. Furthermore, this allowed for the fluid collection and coding
of the dyadic data, data that can often be problematic to gather.
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5.6.2 Dyadic Data
Dyadic data is when data is collected from both sides of a dyad (Homburg and Stock,
2004). In this research customer satisfaction is based on customer’s responses and
employee satisfaction is based on employee’s responses. Past research frequently
collected from only one source and this could have led to common method bias. For
example, asking employees to rate customer satisfaction with their service can be
problematic; if employees are highly satisfied themselves they might rate customers
satisfaction higher (Homburg and Stock, 2004).
Difficulties can arise from collecting dyadic data (Homburg et al., 2009). Homburg
and Stock (2004) noted that in their approach of collecting dyadic data that they may
have brought about a systematic bias by asking employees to choose their customers.
To overcome this systematic bias customers were chosen at random by the
researcher in this research. If the customer agreed to fill out the questionnaire the
researcher took note on their questionnaire which till operator they used. The key to
overcoming the difficulty in collecting dyadic data is to match customers with the
employees correctly. Homburg et al. (2009, p. 45) noted that ‘with respect to the
employee-customer link interviews assigned the customers to the respective
employees code number’.
In order to maintain consistency throughout the stores in the collection for the dyadic
data, the following procedure took place. At the start of the day each till operator
was given an assigned number. This number was written on to their questionnaire.
This number was also written in large writing at the till they sat at. If the employee
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moved till, they took their large hand written number with them and placed it on
their new till. When the customer agreed to answer the questionnaire, they were
asked the number of the till they were at. The researcher double checked this number
and wrote it on the questionnaire before handing it to the customer. In doing so, the
researcher was able to match customers with the corresponding till operator that
served them.
5.6.3 Sample Type
In relation to the nature of the sample, the research participants should provide a real
world setting of interest (Calder et al., 1981). Calder et al. (1981, p. 199) indicated
that this is completed by ‘carefully defining the relevant population for effects of
interest’ and having a representative sample of individuals from this target
population’. This research examines grocery retail stores in Ireland. Grocery retail
stores are utilitarian in nature; however customers do tend to spend more time in the
grocery retail environment compared with other utilitarian environments such as dry-
cleaners or petrol stations. Furthermore the level of target Arousal sought for
customers in a retail setting would be considered low (Mattila and Wirtz, 2006). As
customers spend a considerable time period in the grocery store yet have low target
Arousal, it makes grocery retail stores a unique service environment to be examined.
Both males and females over the age of 18 were asked to take part in the research.
The sample frame was those customers that were shopping on the day the research
was being collected. Research was carried out on different days of the week to limit
any research bias occurring. Employees completed their questionnaire on the same
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day as the customers. To ensure that all respondents were part of the target market,
some descriptive questions were asked. Machleit and Eroglu (2000) in their research
asked respondents about their shopping intentions, how long they spent in store and
the number of times previously shopped in the store. Similar questions were asked to
the customer sample.
5.6.4 Sampling Method
As mentioned, data was collected from customers, employees and managers.
Separate sampling methods were used for each of the three respondent types. All
managers that were available on the day the stores were being investigated took part
in the research. Justifcation sampling was used for the employees. Only employees
that were working on the till for more than two hours were used in the research. This
was done to ensure that there would be sufficient customers to ask to fill out the
questionnaire. With regards to customers, initially justification sampling was used.
This was the initial stage, as only customers who used the employees chosen for the
research were asked. Systematic sampling was then used, with every 4th customer
being asked to fill out the questionnaire. The majority of customers approached
agreed to fill out the questionnaire. Those who refused generally cited pressures of
time as the reason.
As mentioned, retail stores were chosen based on not only a key interest from the
retail stores managers to investigate their atmospherics or the environmental stimuli
but also due to the unique nature of a grocery retail environment. As customers
spend a considerable time period in the grocery store it makes grocery retail stores a
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unique service environment to be examined compared to other utilitarian
environments such as petrol stations or dry cleaners.
5.6.5 Sample Size
According to Fabrigar (1999), researchers need to determine how large the sample
should be and then look at how the sample would be selected from the population.
The stores were chosen based on in depth discussions with the Head of retail
operations of a Grocery retail chain within Ireland. This grocery retailer gave access
to each of these stores and is further considered in the managerial discussions which
can be found in section 5.7.
At least one store manager from each store visited was administered a questionnaire.
Depending on size of store, three to eight till operators were given questionnaires
along with eight to ten customers per till operator. For a sample of 15 stores, this
gave a minimum of 15 managers, between 45 to 120 till operators and between 360
to 1200 customers. Within the literature there are different views on how large a
sample size should be (Fabrigar et al., 1999). In their research, Gracia et al. (2010)
looked at 117 tourist units and collected questionnaires from 349 employees and
1,157 customers and examined five constructs within their proposed model. In
collecting dyadic data, Homburg and Stock (2004) collected 164 dyadic cases, this
consisting of one employee to two customers. Parish et al. (2008) had three rounds
of data collection and collected 706 questionnaires. In their study, Chi and Gursoy
(2009) collected 2023 employee questionnaires, 3346 customer questionnaires and
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250 manager questionnaires. Gazzoli et al. (2010) collected 474 employee and 1,289
customers and 14 manager responses.
Generally it appears to be that the more variables there are the larger the sample size
should be. The proposed model consists of seven constructs and some constructs will
most probably contain sub-factors. However Fabrigar (1999, p. 274) indicated that
‘adequate sample size is not a function of the number of measure variables per se
but is instead influenced by the extent to which factors are over determined and the
level of the communalities of the measured variables’. Gazzoli et al. (2010)
concurred and recognised that their large sample size could influence the model fit
and reliability testing. Bagozzi and Yi (2012, p. 34) highlighted that ‘because the χ2
is sensitive to sample size, it becomes difficult to achieve satisfactory models fits as
the sample size increases. As a result, researchers have proposed a number of
indexes of practical fit’. Model fit and reliability testing will be looked at under
section 5.9.3, SEM: Stage 2, towards the end of this chapter.
5.7 Managerial Discussions
As mentioned, a predominantly positivist approach was taken for this research.
However before the quantitative stage took place, qualitative research was carried
out. This consisted of in-depth interviews with store managers, customers and with
the head of retail operations for Ireland of a grocery retail chain that operates on a
franchise basis. Before approaching the individual store managers, an email was sent
out to the head of retail operations of the grocery chain, followed by several phone
calls. The grocery retail chain was very interested in the research and a meeting was
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set up with the head of retail operations. An in-depth meeting took place at the
headquarters of the grocery chain. This discussion provided confirmation that there
was a need for research in the proposed area. In particular it was highlighted by the
head of retail operations that store design was crucial to further development of
grocery retail stores. While this was a long and wide ranging discussion, the head of
the retail operations requested that it not be recorded.
This informal meeting led to detailed discussions taking place regarding the nature of
the research. The grocery chain was keen to investigate their franchised stores within
the Dublin area and suggested that we contact stores that were based in the greater
Dublin area. Inside store access was crucial to the main data collection stage, as
research needed to be collected within the store environment due to environmental
stimuli being difficult to recall (Bigné et al., 2005). Before contacting each of the
franchised stores, the head of store development examined the initial proposed
questionnaire and gave feedback regarding some of the questions. This also gave
insight into the nature of the grocery industry.
Due to the store being franchised, each individual store was contacted. 15 stores
were chosen based on geographical location, type of store and size of store. Having
stores from the same geographical location limited the impact of differences in terms
of management style and labour markets (Silvestro and Cross, 2000). In their
research, Silvestro and Cross (2000, p. 249) gained access to 15 stores and as it was
a large supermarket chain they suggested ‘the stores have a strong corporate image,
with similar layouts and overall appearance, thus the stores are broadly comparable
in terms of service provision and service levels’. The same holds true for this grocery
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retail chain, which maintains very tight control over the store layout and product
range.
The retail grocery main office passed on a list of the stores, their managers, email
addresses and contact numbers. Four of the stores were owned by the same person
and it was particularly important to have them taking part in the research, as the
sample would be greatly reduced if they did not. Each of the stores were sent an
email regarding the nature of the research and that the main researcher would be in
contact with them shortly afterwards. Within the email, it was explained that the
grocery main office had passed on their details and indicated that they might be
interested in the research. Appendix 2 provides a copy of the email. Having sent an
email to each of the stores, a follow up phone call was arranged with each of the
store managers. An informal phone conversation took place with the managers of the
stores and 15 stores were happy to take part in the research.
Having confirmed 15 stores were willing to take part, a research time frame for the
data collection was worked out with each of the managers of the stores. Research
took place in March/April 2011, during a three week time period. In order to collect
the data as effectively as possible within the short timeframe, a research team was
used. This research team consisted of six individuals who were trained to administer
the questionnaire, correctly collect the dyadic data using the above mentioned
procedure, and were given insight into the aims of the research. Out of the 15 stores
that data was collected from, the main researcher was present at 14 of them. After
the data was collected, a letter was sent out to each of the stores thanking them for
their help. See appendix 3 for a copy of the letter.
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5.7.1 Manager and Customer Interviews
Having confirmed that research would be insightful to the grocery retail chain,
interviews were set up with managers of several of the chains grocery stores. In
order to accomplish the principal objectives of the research, semi structured
interviews were used. In their research, Heide et al. (2009) conducted interviews
based on a carefully developed interview guide, which included topics relating to
company, individual, atmosphere, design and human elements. Similarly for this
research, the interview guide was carefully thought out and topics were chosen based
on the relevant constructs that were being examined. See appendix 4a for the
interview topic guide for the managers. Before having the interviews with the
managers, they were sent a pilot copy of the customer questionnaire, the employee
questionnaire and manager questionnaire to have a look at and discuss at the
interview. Notes were taken and the interviews were recorded. Interviews were
carried out with four managers of the grocery retail chain franchise. One of those
that was interviewed worked at a store that belonged to the group that had four
franchises. This was particular insightful as the discussion ranged across the four
stores.
Similarly to Homburg et al. (2009), interviews were conducted to form a better basis
for the questionnaire. In using semi structured interviews information was gained
that was relevant to the quantitative stage of the research. The objectives of the semi
structured interview were threefold. Firstly, it allowed gaining insight and
understanding of the most appropriate terminology to use in the survey. Kenhove
and Desrumaux (1997) conducted interviews to collect relevant environmental items
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for their questionnaire. From the literature and their qualitative research they were
able to choose the most relevant items for their questionnaire. Homburg and Stock
(2004) followed the same process. Secondly, to identify the most important areas for
further research, any new items or constructs that were considered important by
managers to the research would be reviewed in the literature. Thirdly, to identify and
obtain feedback on the reactions to the questions being asked. These three objectives
helped form a robust basis for the questionnaire development. In particular the
financial measure was adapted to suit the needs of the managers. This was done in
order for them to feel comfortable in answering financial data about their store.
Four customers were interviewed in order to gain insight into their reactions to the
questions and to determine the most relevant terminology. Customers were contacted
by phone and similarly to managers a topic guide was used, as per appendix 4b.
Customers were sent a copy of the proposed pilot customer questionnaire before the
interview for them to have a look at. In their research, Newman et al. (2007) adapted
questions based on suggestions that some of the terminology was outdated. Based on
the interviews with both managers and customers, some wording was changed to the
pilot questionnaire before it was tested. For example, some past research was based
on restaurants (Harris and Ezeh, 2008, Kim and Moon, 2009) whilst other research
used the term ‘shops’ (Hightower et al., 2002) or ‘this facility’ (Wakefield and
Blodget, 1994). In order to maintain consistency, the primary word used was shops.
The following section identifies the literature used in developing the questionnaire
for the initial pilot stage.
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5.8 Questionnaire Development
Similar to Bigne et al. (2005) research, the classification questions relating to
demographic variables and the grocery store, together with multiple-item scales of
the different constructs dealt with in the proposed conceptual model (environmental
stimuli, emotions, customer/employee satisfaction and behavioural intentions), were
included in the questionnaire. The multiple item scales used questions that are in the
form of a statement. For example ‘the music in the store is played at an appropriate
volume’. Similarly to past research a Likert scale was used for respondents to
evaluate their degree of agreement with each of the statements (Baker et al., 1994,
Brady and Cronin Jr, 2001, Dietz et al., 2004, Hu and Jasper, 2010). In their
research, Parish et al. (2008) used a 7 point Likert scale. This research also used a 7
point Likert scale. This allowed for the questions to be coded appropriately for the
analysis stage. PAD was measured with semantic differential scaling because based
on past research (Mehrabian and Russell, 1974, Donovan and Rossiter, 1982, Foxall
and Greanley, 1999, Newman, 2007) this was the most appropriate scale to use and
could be coded appropriately for the analysis stage. Similarly to Funk and Ndubisi
(2006) and Parish et al. (2008) the questionnaire items were adapted from past
studies and fine-tuned to suit this study’s objectives. Each of the items for each of
the construct will be looked at next. Some of the questions are highlighted in red and
this will be discussed in the pilot questionnaire subsection.
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5.8.1 Environmental Stimuli
Numerous studies have considered environmental stimuli to be multidimensional
(Davis, 1984, Bitner, 1992, Areni and Kim, 1994, Aubert-Gamet, 1997, Hightower
et al., 2002, Reimer and Kuehn, 2005, Chebat and Morin, 2007, Morin et al., 2007,
Ryu and Jang, 2007, Parish et al., 2008, Kim and Moon, 2009, Lin and Worthley,
2012, Hooper et al., 2013). Each of the items relating to environmental stimuli can
be seen in table 5.1. Many items were adapted from different authors due to no
single study having examined all items. The aim was to have a minimum of three
items per sub dimension in keeping with the best practice in SEM studies.
Construct Literature Items

Environmental Adapted from Harris and Q. The music played in the store is
stimuli Ezeh (2008). appropriate.
(Music) Q. The music in the store is played at an
appropriate volume.
Q. The music played in the store is
pleasant.
Q. The music played in the store is not
pleasant (R)*
Environmental Kim and Moon (2009) Q. This store is decorated in an
stimuli attractive fashion.
(Design & Items in italics adapted from Q. The interior décor of this store is
Signage)** Jang and Namkung (2009) attractive.
Q. The interior design is visually
Items in bold adapted appealing.
from Hightower et al. Q. The materials used inside the store
(2002) are pleasing and of high quality.
Q. The style of the interior
accessories is fashionable.
Environmental Brady and Cronin Jr (2001) Q. This service provider's layout never
stimuli and Pollack (2009). fails to impress me.
(Layout) Q. This stores layout serves my purpose
Q. The store understands that the design
of its facility is important to me.
Kim and Moon (2009). Q. In this store, the aisles between the
shelves are wide enough to pass
through easily.
Q. The signs in this store environment
provide adequate direction.
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Q. It is easy to walk around this store
and find what you are looking for.
Environmental Harris and Ezeh (2008). Q. The store is kept clean.
stimuli Q. The store has clean walkways and
(Cleanliness) exits.
Q. The store has clean toilets.***
Wakefield and Blodgett Q. The store is not kept clean (R).
(1996) Q. This facility maintains clean food
service areas
Environmental Jang and Namkung (2009) Q. Colours used create a pleasant
stimuli atmosphere
(Colour)** Hightower et al. (2002) Q. The colour scheme in the store is
attractive.
Kim and Moon (2009) Q. The use of colour in the decor
scheme adds excitement to this store
environment
Environmental Kim and Moon (2009) Q. The overall lighting level in this
stimuli store environment is appropriate.
(Lighting) ** Q. Lighting creates a comfortable
Jang and Namkung (2009) atmosphere
Hightower et al. (2002) Q. The lighting is excellent at the
store
Environmental Harris and Ezeh (2008) Q. The aroma in the store is
stimuli inappropriate (R).
(Olfaction)** Q. The aroma in the store is fitting.
Kim and Moon (2009) Q. The aroma in this store is pleasant.
Hightower et al. (2002) Q. The store has a pleasant smell.
Table 5.1 Environmental Stimuli Items
* (R) item is reverse coded.
** Colour, Lighting, Olfaction and Design&Signage tend to be looked at within an
overall concept called atmospherics or facility design or ambient (Hightower et al.,
2002, Jang and Namkung, 2009, Kim and Moon, 2009).
*** Indicated the item was only asked to employees. Toilet was not accessible for
the customers.
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5.8.2 PAD
Mehrabian and Russell’s (1974) 18 item scale formed the basis for this research.
This scale has been used by many authors in past research (McGoldrick and Pieros,
1998, Newman, 2007, Ryu and Jang, 2007, Jang and Namkung, 2009, Hu and
Jasper, 2010). In his research, Newman (2007) looked at Pleasure, Arousal and
Dominance. As noted in Chapter 2, previous research has largely ignored the
Dominance dimension. Newman (2007) suggested that there were necessary
adjustments needed for the scale. Newman (2007) altered the wording of some of the
variables to be more suited to today. The * beside a word indicated that the wording
of the item was changed by Newman (2007). The original wording from Mehrabian
and Russell (1974) study is written in the brackets. A scale of 1 to 7 was used and
the number closest to the adjective that best described the individual’s feelings with
regard to visiting or working in the store was chosen using a semantic differential
scale. The following adjectives were chosen for each of the PAD dimensions. The
questions were asked to both the customers and employees. Table 5.2 identifies the
Pleasure items.
Pleasure
Happy Unhappy
Pleased Frustrated* (Annoyed)
Unsatisfied Satisfied
*Depressed (Melancholic) Contented
Hopeful Despairing
Table 5.2 Pleasure
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Table 5.3 identifies the Arousal items. In their research Mehrabian and Russell
(1974) used Jittery-Dull, Frenzied-Sluggish and Aroused –Unaroused. According to
Newman (2007) the items used in his research coincide with the originally Arousal
dimensions.
Arousal
*Unstimulated (Relaxed) Stimulated

Calm Excited
Sleepy Wide Awake
*Lethargic *Frantic
*Gloomy *Fidgety
*Uncrowded *Jam-packed
Table 5.3 Arousal
Table 5.4 identifies the Dominance items used. The items that are written in italics
were not used by Newman (2007) in his study but are identified by Mehrabian and
Russell (1974).
Dominance
Guided Independent* (Autonomous)

*Restricted (Dominant) Free to act* (Submissive)
Controlled In-control* (Controlling)
Influential Influenced
In control Cared for
Table 5.4 Dominance
In Newman’s (2007) study, two Dominance items appeared to overlap with both a
Pleasure item and with an Arousal item. These are represented in Table 5.5. As the
Dominance dimension is an important dimension for this research, it was considered
important to add all relevant Dominance items to the survey.
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Dominance and Pleasure
Bored Relaxed
Dominance and Arousal
*Unimportant (Awed) Important
Table 5.5 Dominance Overlap
5.8.3 SPC
The SPC takes into consideration the following concepts, service quality, customer
satisfaction, employee satisfaction, customer loyalty and employee loyalty. Service
quality, customer satisfaction, customer attitudinal loyalty and customer behavioural
loyalty were examined on the customer questionnaire as per table 5.6. Customer
loyalty can be measured as behavioural loyalty or attitudinal loyalty. Past research
generally focuses on one or the other (Dick and Basu, 1994, Zeithaml et al., 1996,
Chen et al., 2009). Oliver (1999) indicated that in order to detect customer loyalty
both attitudinal and behavioural should be researched. This questionnaire asked
customers both. Similarly to customers, employees were also asked about their
satisfaction and loyalty as per table 5.7. Due to service quality being a large
construct, this is in a separate table, as per 5.8
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Customer Adapted from Q. How satisfied are you with the service you
satisfaction* Dietz et al. (2004) receive from employee at the supermarket in terms
of...
Q. Providing fast service.
Q. Courtesy and friendliness.
Q. Accuracy of service.
Q. Willingness to help.
Q. Making you feel secure about your transactions.
Q. Showing sincere interest in your questions or
problems.
Q. Resolving problems quickly.
Customer Dick and Basu Q. I am a loyal customer of this store
Attitudinal (1994) and Chen et Q. This store is the first choice for me among the
Loyalty* al. (2009). same types of stores
Q. If there are two stores close to each other and
both of them have similar products and prices, I
will choose to shop here
Customer Zeithaml et al. Q. Say positive things about the store to other
Behavioural (1996) and Harris people
Loyalty* and Ezeh (2008) Q. Recommend the store to someone who seeks
your advice.
Q. Encourage friends to do business with the store
Q. Encourage relatives to do business with the store
Q. Consider the store your first choice to buy
services.
Q. Do more business with the store in the next few
months
Table 5.6 Customer constructs except for Service Quality
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Employee Adapted from Q. Most of the time I am willing to put in extra
Loyalty* Paulin et al. effort so that the store remains a leading store
(2006). Q. I feel proud to work at this store
Q. I would turn down a job with comparable pay
and career prospects to stay at this store
Q. I care about the fate of the shop in which I work
Items in italics Q. I speak highly of the shop in which I work to my
adapted from friends
Currivan (1999)
Employee Homburg and Q. Generally speaking, I am very satisfied with this
Satisfaction* Stock (2004). job
Q. I do not intend to work for a different company
Q. I like my job
Q. There are no fundamental things I dislike about
my job.
Q. I like my job more than many employees of
other companies
Q. I consider this employer as first choice
Q. I am generally satisfied with the kind of work I
Homburg et al. do in this job
(2009). Q. I frequently think of quitting this job
Table 5.7 Employee Constructs
The customers were asked about the service quality that they received, as per table
5.8
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Construct Literature items
Service Adapted from Baker et Q. Customers are treated well.
Quality al. (1994b). Q. Employees are willing to help customers.
Q. Employees give personal attention.
Q. Employees are not too busy to respond.
Items in italics added in Q. The store has fast check-out.
from Hu and Jasper Q. In comparison to other stores, the
(2010). arrangement of this store interior
decorations is better
Q. In comparison to other stores, the
Items in bold adapted design of this store’s interior shopping
from Brady and path is better
Cronin (2001), Sirohi et Q. In comparison to other stores, the
al. (1998) and Chen et design of this stores ambient light is
al. (2009) better
space of this store’s internal paths is more
spacious
design of this store’s checkout counters is
better
design of this store’s external
environment is better
Items in bold and italics Q. I believe the store offers excellent
adapted from Brady and service.
Cronin (2001) Q. The store offers high-quality service.
Table 5.8 Service Quality
5.8.5 Financial Performance
Having reviewed the SPC and services literature and the several measurements used
to examine the financial performance link (Anderson, 1994, Schneider, 2003, Gelade
and Young, 2005, Schneider et al., 2005, Maxham et al. 2008, Chi and Gursey, 2009,
Sheng et al. 2011), it was deemed appropriate to discuss with managers their level of
sincerity regarding the financial performance indicator. Having discussed with
managers during the interview stage, the following questions were adopted from
Sheng et al (2011) and Schneider (2003).They were adapted to a Likert scale of 1-7.
Managers had indicated that they would not be willing to give actual figures. They
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suggested an alternative Likert type question that they felt was more suited. A Likert
scale was developed based on their recommendations and from previous literature
examining the financial performance link within the services literature.
Q. The sales growth
Q. The market share
Q. The profit margin
Q. The average scanning margin for the store
Q. The average footfall of the store
‘The average footfall of the store’ question was developed from interviews with
managers as they suggested this was an important factor to consider when discussing
5.8.6 Control Variables
In order to carry out the analysis some control variables were needed. This allowed
for each of the objectives to be met. As noted this research carryed out three different
surveys. These were colected from managers, till operators and customers. All three
types of respondents were asked, age and gender, in order to gain demographic
characteristics of the sample.
Q. Store location
Q. Please indicate your gender
Q. What age group do you belong too
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Customer questionnaire
Customers were asked the following questions. This allowed for information to be
gathered regarding customers shopping intentions. This helped with research
objective one.
Q. How much did you spend in store today?
The above question was based on findings from the interview process. Customers
were asked to tick a box.
These two questions were adapted from Machleit and Eroglu (2000):
Q. How long did you spend in the store?
Q. What was the shopping intention of your visit?
These two questions were adapted from Maxham et al. (2008):
Q How many times would you visit this store on a weekly basis?
Q What would be your average spend per visit?
The following question was asked in order to connect customers with the employees.
This is vital for the collection of dyadic data.
Q Which till operator did you use?
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Employee questionnaire
Similar to previous research, employees, the till operators and managers, were asked
time in job and full/part time position (Carlopio, 1996, Gelade and Young, 2005).
Q. Are you a full-time or part-time employee in this store?
Q. How many hours a week do you work?
Manager questionnaire
Q. How long have you been working for ________?
Q. How long have you been the store manager in this store?
Q. Did you work as a store manager before this store on behalf of _______? Yes/ No
Q. If Yes, How many years?
Q. Has the supermarket been refurbished in the last 5 years? Yes/No
Q. If Yes, when was it refurbished?
Q. If No, when was it opened?
Q. What is the number of full time employees working in this store
Q. What is the number of part-time employees working in this store
Having developed the questionnaire using existing scales from literature and from
refining the wording through in-depth interviews with managers, the pilot
questionnaire was administered.
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5.8.7 Pilot Questionnaire
Before administrating the final questionnaire, it is beneficial to conduct a pilot
questionnaire (Saunders et al., 1997, Jang and Namkung, 2009). This pilot testing
phase is carried out in order to evaluate the questionnaire further. McKinney (2004)
indicated that a pre-test can improve the content or the wording of a survey. Parish et
al. (2008) concurred and indicated that asking bilingual speakers to review the
survey to ensure that those who spoke English as their second language would
understand the wording was also important. This survey was given to several
bilingual speakers, French, German, Italian and Polish native speakers, to clarify the
wording used.
The pilot survey was with two groups. One group was full time retail managers who
were doing a part time postgraduate course; they completed the employee
questionnaire using a paper based questionnaire. The second group were students
who did their own shopping or were customers of grocery retail stores; they did the
survey online. The survey was distributed to 600 students on undergraduate and
postgraduate programmes. In all, 133 customer questionnaires and 61 employee
questionnaires were collected. The profile of the respondents is 42% male and 58%
female. 51% of the employees were aged 18-24, with the remaining 49% being 25-
54. 63% of the customers were 18-24, the remaining 27% being 25 years and older.
Similarly to Hume and Mort (2010) and Mak and Sockel (2001), the pilot
questionnaire was analysed using reliability testing and factor analysis. This was
carried out to ensure the internal validity of the model constructs. In their pilot
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survey, Wu and Liang (2009) eliminated questions based on respondents’
suggestions and the item factor loading. Based on previous research, Newman et al.
(2007), Harris and Ezeh (2008), Kim and Moon (2009), and given the size of the
sample (n=133), a factor loading of .32 and below was considered to be poor, .4
significant, and loadings of .6 or greater as very significant. Similarly to Harris and
Ezeh (2008), factors were only retained if they possessed an eigenvalue greater than
1. Cronbach alpha scores were computed on the factors to indicate the level of
internal consistency and reliability (Harris and Ezeh, 2008). Slater (1995) argued that
the most commonly reported measure of reliability is the Cronbach and that the usual
criterion is 0.7 or above. The goal of the pilot data analysis was to verify the
appropriateness of the items. This was in order to have a solid framework for the
next stage of data collection.
Within the questionnaire development stage above, section 7, there were several
items that were highlighted in red. The items highlighted in red were deleted from
the final questionnaire. In total 8 items were deleted and these are addressed in table
5.9.
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Question Item Deletion
Q. The music played in the store is not Music item Crossloadings
pleasant (R)*
Q. The style of the interior accessories is Design& Signage Crossloadings
fashionable item
Q. The store is kept clean Cleanliness item Loading less than .4
Q. The store has clean toilets. Cleanliness item Removed to
maintain
consistency
Q. The aroma in the store is inappropriate Olfaction item Loading less than .4
(R).
Q. The store has fast check-out. Service Quality Loading less than .4
Q The space of this store’s internal paths is Service Quality Crossloadings
more spacious
Q. The design of this stores ambient light is Service Quality Forming separate 1
better item factor
Table 5.9 Deleted Items
Three out of the eight items were deleted due to item loadings of less than .4. The
music item had crossloadings with the Cleanliness factor and was deleted due to it
being unreliable. The Design & Signage item was deleted as it was found to be
unreliable and had crossloadings with the Cleanliness factor. ‘The store had clean
toilets’ was only asked to employees as customers did not have access. For this
research environmental stimuli impacting both customers and employees were being
analysed. As customers did not examine this aspect of the service environment, it
was removed from the final questionnaire.
The service quality item ‘the space of this store’s internal paths is more spacious’
was found to be unreliable as it crossloaded across the two service quality factors
that were found from the pilot study. The final item to be deleted was ‘the design of
this stores ambient light is better’ as it did not relate to the service quality
dimensions found.
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Some of the key findings of the pilot are as follows. A four factor solution was found
for the customer environmental stimuli construct. The four factors, along with their
Cronbach alpha scores, were: Ambience (.869), Design & Colour (.820), Cleanliness
(.763) and Layout (.755). Similarly a four factor solution was found for the employee
environmental stimuli construct these were; Ambience (.926), Cleanliness (.771),
Workspace (.802) and Music (.730). Significant differences were found across the
factors; in particular Music was a separate factor for employees, whilst for customers
music was part of the Ambience factor. The four factors found suggest that a
difference exists in how the environment is perceived by customers and employees
(Kearney et al, 2013). Using multiple regression, the effects of the customer
environmental stimuli factors on customer satisfaction was tested. Similarly, the
effects of the employee environmental stimuli factors on employee satisfaction were
tested. Of particular interest was that the employee factor of ambience had a high
significant effect on employee satisfaction (Kearney et al., 2013). For further
analysis of the pilot research, please see Kearney et al. (2013).
In their research, Jang and Namkung (2009) gave the store managers the
questionnaire to review before the questionnaire was finalised. These questionnaires
were given to several managers of the retail chain being looked at before it was
administered in the stores. Based on their recommendations, a further few minor
wording and grammar changes were made. The final questionnaires used can be seen
in appendices 5a, 5b and 5c.
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5.9 Method of Analysis
As suggested by Anderson and Gerbing (1988), data was analysed using a two-step
approach in which the measurement model was first confirmed and then the
structural model was tested. Before analysing the data, the data needed to be cleaned.
5.9.1 Data Cleaning
Once the data has been appropriately collected, it needs to be cleaned or sometimes
referred to as screened. This relates to dealing with missing data, normality of the
data and outliers. This is a necessary first step to any analysis that is time consuming
and often overlooked (Hair et al., 2010).
5.9.1.1 Missing Data
The analysis of data can be significantly affected by missing data (Schumacker and
Lomax, 2004). Tabachnick and Fidell (2007, p. 62) indicated that ‘the pattern of
missing data is more important than the amount of missing data.’ Data can be
missing completely at random (MCAR), missing at random (MAR) or missing not at
random (MNAR) (Tabachnik and Fidell, 2007). According to Tabachnick and Fidell
(2007), having MCAR is the best possible missing data.
There are several ways to deal with missing data. If there are substantial amounts of
missing data, data could be deleted. If the sample is large and missing values is small
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you could estimate missing values. Schumacker and Lomax (2004) suggested several
statistical options for dealing with missing data as per table 5.10 below.
Listwise Delete subjects with missing data on any variable

Pairwise Delete subjects with missing data on only the two
variable used
Mean Substitution Substitute a mean value for missing values of a variable
Regression Imputation Substitute a predicted value for the missing values of a
variable
Maximum likelihood Find expected value based on maximum likelihood
(EM) parameter estimation
Matching Response Match variables with incomplete data to variables with
Pattern complete data to determine a missing value
Table 5.10 Options for Dealing with Missing Data
Source: Schumacker and Lomax (2004, p. 25)
For SEM it has been recommended to use EM (Schumacker and Lomax, 2004,
Ullman, 2007). This method is an iterative two stage process, which involves the
expectation (E) and the maximisation (M) stages (Hair et al., 2010). ‘The E stage
makes the best possible estimates of the missing data and the M stage then makes
estimates of the parameters’ (Hair et al., 2010, p. 50).
5.9.1.2 Data Normality
Ullman (2007) suggested that one of the limitations to the estimations that are often
used in SEM is the assumption of multivariate normality. In order to determine the
extent of the non-normality within the data, skewness and kurtosis can be used.
Skewness relates to the asymmetry of the distribution and can be skewed to the left,
positive skewness, or skewed to the right, negative skewness (Tabachnik and Fidell,
2007). Skewed data or data that is more frequent along one part of the measurement
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scale will affect the variance-covariance among variables. However Tabachnick and
Fidell (2007) noted that in large samples the significance of the skewness is not as
important as its deviation from zero. This also holds true for the kurtosis. Kurtosis
relates to the peakedness or flatness of the distribution (Schumacker and Lomax,
2004). Leptokurtic data values are more peaked and platykurtic data values are
flatter (Schumacker and Lomax, 2004). Extreme values for skewness and kurtosis
are below -3 or above +3. Under normality, the skewness and kurtosis should be
zero, above zero indicates a departure from normality (Hair et al., 2010). If non-
normal data is identified, outliers should be investigated for.
5.9.1.3 Outliers
According to Hair et al. (2010, p. 64), ‘outliers are observation with a unique
combination of characteristics identifiable as distinctly different from the other
observations’. They can occur due to procedural error (data entry error),
extraordinary event (hurricane), extraordinary observations (no explanation for
occurrence), unique in their combination, or actual extreme values from self-reported
data (Tabachnik and Fidell, 2007).
Outliers can affect the mean, standard deviation, skewness or kurtosis of the data and
need to be identified in order to explain, delete or accommodate them (Schumacker
and Lomax, 2004) . Mahalanobis distance statistic can be used in SPSS to identify
outliers. It allows for a multivariate assessment of each of the observations across
the set of variables. Each outlier should be evaluated as they can be either beneficial
or problematic (Tabachnik and Fidell, 2007).
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5.9.2 SEM: Stage One
The aim of the factor analysis was twofold; firstly to explore constructs and to
identify the most salient factors and secondly to confirm previous constructs.
Exploratory factor analysis can be used to identify new items or constructs.
Exploratory analysis can be useful for scale development as it reduces the large
number of items to a more manageable set (Gerbing and Anderson, 1988). Churchill
(1979, p. 69) concurred and noted that ‘factor analysis can indeed be used to suggest
dimensions’. It is a useful analysis for preliminary scale construction, which is
followed by confirmatory analysis. According to Anderson and Gerbing (1988, p.
412) ‘the distinction in practice between exploratory and confirmatory analysis can
be thought of as that of ordered progression’.
Confirmatory Factor Analysis (CFA) was performed to identify whether the
measurement items reliably reflected the constructs (Ryu and Jang, 2007). Churchill
(1979, p. 69) indicated that ‘factor analysis can be used to confirm whether the
number of dimensions conceptualised can be verified empirically’. Gerbing and
Anderson (1988) concurred and noted that CFA is needed to evaluate and refine the
constructs. According to Gerbing and Anderson (1988, p. 190) the ‘reliability of the
scale is determined by the number of items that define the scale and the reliabilities
of those items’. Each of the proposed scales contained a minimum of three items.
Within this first step, Cronbach alpha scores were computed on the factors to
indicate the level of internal consistency and reliability (Harris and Ezeh, 2008, Liu
and Jang, 2009). SPSS was utilised to calculate Cronbach alpha. The most
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commonly reported measure of reliability is the Cronbach and that the usual criterion
is 0.7or above (Homburg and Stock, 2004, Parish et al., 2008, Chi and Gursoy, 2009,
Gracia et al., 2010). In the second stage, the structural model was tested using
LISREL 8.8 to determine the adequacy of the proposed model. Each of the factors
were re-examined in LISREL to ensure reliability and internal consistency. SEM will
be looked at in more detail next.
5.9.3 SEM: Stage Two
Jarrett (2000, p. 288) indicated that ‘SEM has been widely adopted in many
disciplines, since it recognises that latent variables...are measured with error, can
allow for feedback effects in the model and recognises correlations between
residuals’. Hershberger (2003) agreeed and indicated that there has been a steady
growth in the number and variety of journals using SEM. The utility of SEM as a
tool has become increasingly apparent and has spread too many fields, from
behavioural and biological sciences to marketing and demographics (Hershberger,
2003, Bagozzi and Yi, 2012). It has also been used in fields relating to this research
including consumer behaviour (Ryu and Jang, 2007), servicescape (Parish et al.,
2008) and climate literature (Gracia et al., 2010).
According to Ullman (2007, p. 676), ‘SEM is a collection of statistical techniques
that allow a set of relationships between one or more IV’s [Independent Variable],
either continuous or discrete, and one or more DV’s [Dependent Variable], either
continues or discrete to be examined’. Jarratt (2000) suggested that SEM is an
257
analysis technique that specifies direct and indirect relationships between dependent
and independent and constructs.
In contrast to multiple regression analysis, SEM allows for multiple and interrelated
dependence measures such as those specified in this thesis. A key benefit of SEM is
that it examines relationships between and among one or more of the dependent
variables and two or more independent variables (Parish et al., 2008). Through using
SEM, researchers are provided with a comprehensive means for assessing and
modifying the theoretical relationships between the dependent and independent
variables (Anderson and Gerbing, 1988, Bagozzi and Yi, 2012).
SEM allows us to hypothesize ‘latent variables or unobserved constructs that can be
approximated by measurable variables’ (Schumacker and Lomax, 2004, p. 7). There
is greater recognition given to the ‘validity and the reliability of observed score from
measurement instruments’ (Grapentine, 2000, p. 14). The latent variables will be
measured using reliable and validated multi-item scales as mentioned. This approach
helps minimise random measurement error and maximise reliability and validity
(Michon et al., 2005). With multiple regression analysis all variables are assumed to
be correlated and measured without error.
However, SEM techniques explicitly take measurement error into account when
statistically analyzing data (McQuitty, 2004), which allows reliability to be
accounted for within the analysis (Schumacker and Lomax, 2004). This also enables
the researcher to specify structural relationships among the latent variables thus
producing more precise representations (Schumacker and Lomax, 2004). Through
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allowing specified relationships SEM produces a more accurate representation than
path analysis, where variables are measured without error (Tabachnik and Fidell,
2007).
The most prominent advantage of SEM, which sets it apart from other multivariate
techniques, is its ability to allow for the consideration of simultaneous equations
with many dependent variables. Complex relationships can be examined when the
phenomenon of interest is multidimensional. SEM analysis allows for complete and
simultaneous tests of all the relationships in the proposed model (Tabachnik and
Fidell, 2007). SEM was chosen because it can support simultaneously latent
variables with multiple indicators, interrelated dependent variables, mediating
effects, and causality hypotheses (Tabachnik and Fidell, 2007).
Despite its clear advantages SEM is considered to be ‘complex to implement and the
appraisal of findings can be difficult as well’ (Bagozzi and Yi, 2012, p. 8).
Furthermore, it is often incorrectly interpreted because of how it is represented in a
model. The directional arrows in the model do not represent that the directionality
has been tested. It is important to note that although SEM is referred to as a form of
causal modelling, it does not allow us to discover causative relationships (Hightower
et al., 2002, Reimer and Kuehn, 2005). SEM is a means by which theoretical
relationships can be tested (Grapentine, 2000, Schumacker and Lomax, 2004).
It has generally been accepted that there are five key steps to SEM, model
specification, model identification, model estimation, testing model fit and model
modification (Ullman, 2007, Schumacker and Lomax, 2004).
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5.9.3.1 Model Specification
This first step involves using all the relevant theory, information and research to
propose the theoretical model (Schumacker and Lomax, 2004). The proposed model
was developed from the relevant theory based on chapters one to four and is shown
in figure 5.2. Once this theoretical model has been developed a path diagram is used
to illustrate the model to be tested. According to Byrne (2001) SEM models are
schematically depicted using particular configurations of four geometric symbols.
A oval or ellipse, which represents the unobserved latent variables (Schumacker and
Lomax, 2004), a square or rectangle represents the observed variables, a single
headed arrow represents the impact of one variable on another and a double headed
arrow represents correlations between pairs of variables (Kline, 2005). Every line
with a single arrowhead represents a hypothesised direct effect of one variable on
another. ‘The arrowhead points to the presumed effect and the line originates from a
presumed cause’ (Kline, 2005, p. 68). These direct effects can be termed paths and
the statistical estimates of these paths are called path coefficients. In Figure 5.2 the
single arrow lines represent the hypothesised relationship between the variables. The
variables with the arrow pointing towards them are the dependent variables. For
example, employee satisfaction is an independent variable relating to the dependent
variable of employee loyalty.
5.9.3.2 Model Identification
According to Schumacker and Lomax (2004, p. 63) ‘it is crucial that the researcher
resolve the identification problem prior to estimation of parameters’. Identification
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problem relates to theoretical models having infinite number of possible solutions.
For example, a theoretical model might suggest that X + Y = 10, there may be no
unique solution for X and Y, X could be 2 and Y could be 8 or X could be 7 and Y
could be 3. There is indeterminacy, the possibility that the data can fit more than one
theoretical model (Schumacker and Lomax, 2004, Ullman, 2007).
‘A model is said to be identified if there is a unique numerical solution for each of
the parameters’ (Ullman, 2007, p. 709). A key concern for identification is to find
the unique set of parameter estimates, once the parameter specification are indicated
‘the parameters are combined to form one and only one Σ (model implied variance-
covariance matrix)’ (Schumacker and Lomax, 2004, p. 64). The parameters and the
data points in the model should be counted, in SEM the variances and covariances of
the sample covariance matrix S, are the data points (Ullman, 2007). ‘The sample
covariance matrix implies some underlying, yet unknown theoretical model…known
as the covariance structure (Schumacker and Lomax, 2004, p. 62).
Each parameter in a model can be termed a free, fixed or constrained parameter. A
free parameter is an unknown value, a fixed parameter is a set value, typically 0 or 1
and a constrained is also an unknown value but is constrained to equal one or more
parameters (Schumacker and Lomax, 2004). For example, if X is fixed to 7 then the
only solution for Y could be 3, resulting in an identifiable equation. Bagozzi and Yi
(2012) suggested that SEM uses measurement models that are constrained by the
hypotheses of the model.
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The three levels of model identification are: under-identified, just-identified and over
identified (Schumacker and Lomax, 2004, Bagozzi and Yi, 2012). Each level
depends on the amount of information in the sample variance-covairance matrix S. If
there are more data points then parameters to be estimated, the model is said to be
overidentified because there is more than enough information in the matrix S
(Schumacker and Lomax, 2004, Ullman, 2007). The model is just-identified, if there
is the same number of data points as parameters or just enough information in the S
matrix. If there is not enough information in the S matrix, i.e. not enough data points
for the parameters to be estimated then the model is underidentified or not identified
(Ullman, 2007).
If a model is just-identified or overidentified then the model is identified and has
positive degrees of freedom (Schumacker and Lomax, 2004). In order to avoid
underidentification, three indicators or more should be used to measure a factor
(Bagozzi and Yi, 2012). However though a two item factor is underidentified, when
integrated in a model with other three or four item factors the overall model may be
overidentified. The extra degrees of freedom from the other factors could provide the
necessary degrees of freedom to identify the entire model (Hair et al., 2010).
5.9.3.3 Model Estimation
There are several estimation procedures available. Some of the more well-known
types are ordinary least squares (OLS), generalized least squares (GLS) and
Maximum likelihood (ML) (Schumacker and Lomax, 2004). An appropriate
estimation procedure should be applied in order to minimize the difference between
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the implied matrix Σ and the sample matrix S. According to Hair et al. (2010, p.
661), ‘the most common SEM estimation procedure is’ ML. ML is sometimes
referred to as MLE, where E stands for estimation. ML is an iterative procedure,
assumes multivariate of the observed variables, more efficient and unbiased, and can
be used for sample sizes as small as 50 (Schumacker and Lomax, 2004).
5.9.3.4 Model Testing
There are numerous fit criteria for assessing how well a model fits the data. There
are different criteria across disciplines and a lack of clarification as to what measures
should be used. However Schumacker Lomax (2004, p. 69) suggested there are ‘two
ways to think about model fit’, a global test of fit for the entire model and the fit of
individual parameters of the model. Hooper et al. (2008) suggested using the chi-
square statistic (χ²), degrees of freedom (df), p-value, Root Mean Square Error of
Approximation (RMSEA) and Standardised Root Mean Square Residual (SRMR)
for global fit indices.
The main criteria for fit are the chi square test and the RMSEA (Schumacker and
Lomax, 2004). The chi-square test evaluates overall model fit. The ratio of chi
square and is degree of freedom is examined (χ²/df). Ullman (2007, p. 715)
suggested a ‘good fitting model may be indicated when the ratio of the χ² to the
degrees of freedom is less than 2’. Schreiber et al. (2006) highlighted that two or
three times is the general rule for acceptable model fit.
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RMSEA is the most commonly used and is considered to one of the most
informative fit indexes (Wangenheim et al., 2007, Chi and Gursoy, 2009, Homburg
et al., 2011, Yee et al., 2011). There is some debate about what is a good or
acceptable level of fit but a general rule of thumb would be, levels of .05 are below
are considered to indicate a good fitting model and .05 to .08 are considered to be
acceptable levels of fit (Homburg and Stock, 2004, Schumacker and Lomax, 2004,
Ullman, 2007, Hooper et al., 2008). Small values of SRMR indicate a good fit. It can
range from 0 to 1, values of .08 or less are desired (Hu and Bentler, 1999, Schreiber
et al., 2006). SRMR relates to the average ‘distances between the sample variances
and covariances and the estimated population variances and covariances’ (Ullman,
2007, p. 720).
In the past goodness-of-fit (GFI) and adjusted goodness-of-fit (AGFI) were
commonly used as fit indexes for examining SEM (Schumacker and Lomax, 2004).
However most recently within the services marketing literature many authors are
using the normative-fit index (NFI) and the comparative–fit index (CFI)
(Wangenheim et al., 2007, Gracia et al., 2010, Homburg et al., 2011) to represent the
fit of their dyadic data. Parish et al. (2008) examined the effect of the servicescape
on employees and though they did not use dyadic data, they also used CFI and not
GFI. Furthermore, Mulaik (1989) recommended that it is appropriate to use GFI
when the sample size is larger than 200 but if sample is smaller than it is not the
most appropriate measure.
The second step involves examining the individual parameters of the model
(Schumacker and Lomax, 2004). This involves examining the parameter estimate,
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standard error and t-value. The R², reliability and correlated measurement error are
also important procedures that should be looked at.
Parameter Estimate
Parameter estimates are fundamental to SEM as they are used to estimate the
population covariance matrix for the model (Tabachnik and Fidell, 2007). The
parameter estimates should be examined to determine if they have the correct sign
associated with them (Schumacker and Lomax, 2004). The sign should agree with
what is expected from the theoretical model. Positive signs signify an increase in
value in the dependent factor and a negative sign indicates a decrease in value in the
dependent factor. Within LISREL, the parameter estimates of the model relates to
the standardised loadings or beta coefficients. The standardised loadings ‘reflect the
change in dependent measure for each unit change in the independent variable’ (Hair
et al., 2010, p. 211).
Standard error
According to Joreskog and Sorbom (2001, p. 4), ‘each standard error is a measure of
the precision of the parameter estimate’. It relates to the measure of variation in the
predicted values (Hair et al., 2010). If they are small then the parameters have been
estimated accurately.
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t-value
The t-value is the ratio between the parameter estimate and its standard error
(Joreskog and Sorbom, 2001). It is used to determine if the particular parameter is
not equal to zero given a stated confidence level. T–values between -1.96 and 1.96
are not significant at the 5% confidence level and values between -2.57 and 2.57 are
not significant at the 1% confidence level (Schumacker and Lomax, 20040).
R²
R² can be referred to as the coefficient of determination (Hair et al., 2010). It relates
to the amount of variance that is explained in the dependent variable which is
accounted for by the independent variable(s).
Reliability
As mentioned, Cronbach alpha was used to assess internal reliability during the first
stage of analysis. However, with the popularity of SEM, researchers have begun to
use two other indicators of internal consistency. It was Fornell and Larcker (1981)
who endorsed the use of the Composite reliability (CR) and Average Variance
Extracted (AVE) indicators to assess internal consistency. CR draws on standardised
loadings and measurement (standard) error for each item. This internal consistency
indicator needs to exceed .6 (Bagozzi and Yi, 2012). AVE is the second indicator
and shows the amount of variance that is captured by the factor in relation to the
amount of variance due to measurement error (Fornell and Larcker, 1981, Bagozzi
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and Yi, 1988, Shook et al., 2004). The AVE should exceed .5 (Bagozzi and Yi,
1988). In more recent times, CR along with AVE appear to be the customary choice
in the literature for assessing reliability (Eskildsen et al., 2004, Wangenheim et al.,
2007, Gounaris, 2008, Harris and Ezeh, 2008, Kim and Moon, 2009, Hu and Jasper,
2010, Bagozzi and Yi, 2012), whereas before t –tests were standard (Shook et al.,
2004).
Correlated measurement error
According to Joreskog and Sorbom (1993, p. 96), within SEM ‘all errors terms are
assumed to be uncorrelated by default’. However one may have reason to specify
that two or more error terms are in fact correlated (Joreskog and Sorbom, 1993). This
is known as a correlated measurement error (Schumacker and Lomax, 2004). Within
LISREL, it is clarified by setting the covariance error.
5.9.3.5 Model Modification
If the fit of the proposed model is not acceptable, as is often the case, modifications
to the model may be needed to help improve the fit. Within LISREL, modification
indexes can be captured and represented. These indexes specify paths whose addition
to the model could reduce the overall chi-square resulting in a better fitting model
(Schumacker and Lomax, 2004). A key rule of thumb when making modification to
the model is that any proposed changes to paths should be firmly supported with
robust theoretical justification (Schumacker and Lomax, 2004, Ullman, 2007).
Modification indexes alone should not guide a new model.
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5.9.4 Common Method Bias
Podsakoff et al. (2003) suggested that different methods are needed to examine
common method bias. The methods used depend on the type of research being
carried out. Due to dyadic data being examined, where information is collected from
two separate sources, this rules out the risk of common method bias (Homburg and
Stock, 2004). Podsakoff et al. (2003) highlighted that common method bias can be
controlled for by obtaining measures of the predictor and the criterion variable from
separate sources; in this research data was collected from customers, employees and
managers. Thus following these procedures, common method bias was deemed as
non-problematic.
Podsakoff et al. (2003) and MacKenzie and Podsakoff (2012) indicated that
procedural remedies relating to the questionnaire design can be completed to control
for method variance. The following procedural remedies were used, respondents
answered anonymously, verbal labels were provided and focused questions, double
barrelled questions and unfamiliar terms were avoided. One of the most widely used
common method variance tests is the Harmon’s single factor test (Podsakoff et al.,
2003), which will be used to check for common method bias.
5.10 Conclusion
Three gaps in the literature were highlighted that related to the SPC, servicescape
model and employee environmental stimuli. Three research objectives relating to
these gaps were identified and the proposed model includes 13 hypotheses. In taking
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a positivist approach, the main form of data collection was questionnaire. Interviews
and a pilot questionnaire were carried out to gain adequate insight before
administering the final questionnaire. SEM is considered to be a two stage process;
first stage involves the CFA, which measures the factors, the second stage relates to
testing the structural model. The next chapter will examine the findings from the two
step SEM process that was suggested.
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6 CHAPTER 6 Analysis
You can use all the quantitative data you can get, but you still have to…use your
own intelligence and judgment.
Alvin Toffler, American Author
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6.1 Introduction
The analysis begins with cleaning the data collected. This research uses dyadic data
and the operationalisation of this will be explained. The first stage of analysis used
Confirmatory Factor Analysis (CFA). Using the format of the proposed model,
Stimulus-Organism-Response, each of the factors will be analysed in order of:
environmental stimuli for customers, environmental stimuli for employee, PAD
customers, PAD employees, customer satisfaction, service quality, customer loyalty,
employee satisfaction, employee loyalty and financial performance. Based on this
first stage of analysis, the hypotheses are further fine-tuned before examining the
second stage of the analysis using Structural Equation Modelling (SEM). The
findings for each of the hypotheses relating to the research objectives are identified
and explored. Table 6.26 identifies the significant and insignificant links found. The
chapter concludes with results and analysis of the final model.
6.2 Data Cleaning
The proposed sample was a minimum of 15 managers, between 45 and 120 till
operators and between 360 and 1200 customers, as per chapter five. The sample
collected consisted of 27 managers, 103 till operators and 1030 customers. This was
an acceptable sample size (Fabrigar, 1999). Maximum Likelihood (EM) was used to
deal with missing data as it is recommended for SEM (Ullman, 2007). Except for the
PAD data, EM was used to find the expected value for the missing data. PAD will be
looked at in more detail later in this chapter. No extreme values were found for
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skewness or kurtosis. However, for customers there were six respondents that were
deleted based on Mahalanobis distance as outliers. These were deleted on a one by
one basis based on their extreme values along the customer satisfaction construct.
There was no theoretical justification for their extreme values and thus they were
deleted from further analysis. This resulted in 1024 customer respondents, which
were then aggregated to employee level. This resulted in 100 customer-employee
pairs. As this research was examining dyadic data, several customer respondents
were further deleted. This will be looked at next.
6.3 Dyadic Data
As the research collected dyadic data, this resulted in the customer data being
median aggregated to the employee level. According to Wangenheim et al. (2007, p.
694) ‘aggregating would imply averaging over the lowest level’ in this case the
employee. By aggregating the data similarly to Wangenheim et al. (2007, p. 694)
‘overestimation of the effects of employee satisfaction on customer satisfaction is
avoided’. In aggregating the data, the data set was reduced and resulted in 97 useable
dyads. Six dyads were eliminated due to some employees not having any customer
questionnaire responses, only one customer response for employees and missing data
on customer responses. This may appear to be a small sample but 1024 customers
have been aggregated across the 103 employee responses. Gracia et al. (2010) used a
set of 117, Homburg et al. (2011) used a set of about 195 and Homburg and Stock
(2004) used a set of 164 in examining their models.
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Schumacker and Lomax (2004) note that using only one fit index should not be
relied on. In this case, due to the data being dyadic, aggregated and the sample size
being 97 then it is not appropriate to use GFI as a measure of fit. As dyadic data is
being examined here CFI and NFI will be the main fit indexes that will be used. As
mentioned in the methodology, chapter five, AVE and CR are used to assess the
internal consistency and reliabilities of the constructs.
6.4 Descriptive Analysis
Data was collected from 15 stores in the greater Dublin area. The stores ranged from
having 59 to 80 customer respondents and five to ten employee respondents. The
profile of the customer respondents was as follows: Gender, 28% were male, 67%
were female, missing 5%; Age, 8% were 18-24, 18% were 26-35, 23% were 36-45,
23% were 46-55, 16% were 56-65, 9% were 65+ and missing 3%. There were slight
variations across the stores. For example, store one had 30% aged 18-25 and gender
was more evenly distributed with 42% male, 56% female and 2% missing. This was
probably due to the stores close proximity to several universities. Store 14 had 26%
aged 18-25, 33% aged 26-35 and gender was more evenly distributed with 47%
male, 50% female and 3% missing. Similarly to store one, location probably
impacted this particular store due to it being in a financial district, where there would
be many office workers.
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In aggregating the data to employee level, the customer demographics are no longer
suitable for use as control variables. In analysing the final model, the employees and
managers provided the data that was used for the control variables.
The profile of the employee respondents was as follows: Gender, 28% were male
and 72% were female; Age, 56% were 18-24, 24% were 26-35, 7% were 36-45, 7%
were 46-55 and 6% were 56-65.
6.5 Common Method Bias
Podsakoff et al. (2003) and MacKenzie and Podsakoff (2012) suggest several
techniques for reducing common method bias. In order to reduce common method
bias within this research the following procedures were carried out: the factors were
measured with psychological and proximal separation, thus factors were measured in
different parts of the questionnaire and with different sets of instructions; respondent
anonymity was protected and assurance was given to respondents that there were no
undesirable or incorrect answers; and a Harmon single factor test was carried out.
All variables were loaded into a factor analysis model in order to carry out a Harmon
single factor test. A major assumption of the Harmon single factor test according to
Padoskoff et al. (2003, p. 889) is ‘that if a substantial amount of common method
variance is present, either a single factor will emerge from the factor analysis or one
general factor will account for the majority of the covariance among the measures.’
Neither of these occurrences appeared as multiple factors were found with the factor
analysis. When one factor was specified in SPSS, it resulted in one factor explaining
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18% of the variance. This clearly indicates that there is no significant level of
common method bias.
6.6 Confirmatory Factor Analysis (CFA)
Each of the factors in the proposed model will be analysed using Confirmatory
Factor Analysis (CFA). They will be looked at in order of the SOR as suggested in
the proposed model, see figure 5.2 in chapter 5. Each of the factors and constructs
will be examined and explained. The proposed model will then be examined in its
entirety using SEM in LISREL 8.8, as per Anderson and Gerbing (1988) two step
procedure.
6.6.1 Customer Environmental Stimuli
As noted within the literature, the servicescape model has been frequently used to
examine the environmental stimuli impacting customers (Tombs and McColl-
Kennedy, 2003). A one-factor model on which all 26 items loaded on the
environmental stimuli construct was run in LISREL. Fit statistics for this model were
poor with a significant chi square value of 732.83.47, df 299, p-value .0000. Other fit
statistics also did not meet the criteria standards for adequacy of fit, for example the
RMSEA was .123 and SRMR was .081, suggesting that perhaps this model has been
mis-specified. Bitner (1992) suggested that the servicescape model contained three
dimensions and each dimension contained several factors. Each factor of the
servicescape construct was then examined in isolation. However within LISREL a
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factor must have more than three items to be able to determine the model fit on its
own. Due to this the factors of colour, music, olfaction, lighting and layout were
looked at with other factors to determine their fit. Each factor was also examined
with every other factor in the model. This resulted in a total of 136 tables of factors.
Appendix 6 gives the tables for each of the factors. Chi and Gursoy (2009) tested
factors in sets of two and this was carried out for all the factors in the analysis.
6.6.1.1 Layout
The item LAY1 had a R² of .14. This is exceptionally poor. Participants repeatedly
indicated to the research team that they were unsure what the question was asking. A
reason may be that the wording of ‘never fails’ appeared to be problematic for this
question and as a result this was deleted from further analysis. When re-examined
without the LAY1 there was a significant improvement on the statistical fit.
However the fit was just an acceptable level. LAY4 was found to have significant
cross loadings with LAY2 and LAY5 and was thus removed from analysis. Though
LAY2 had a low R² of .35, this is only slightly deviated from .40, which is
considered the minimum acceptable level. Homburg et al. (2011) and Homburg and
Stock (2004) suggest items that only slightly deviate from .40 can be kept in to
preserve conceptual comprehensiveness of the factor. They kept items in that were as
low as .30. Thus the item was left in. The CFA had an acceptable fit, as per table 6.1
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Label Item Standardised Error t-value R²
Loading Variance
LAY1 The store layout never fails to
impress me
LAY2 In this store, the aisles between .60 .65 6.12 .35
the shelves are wide enough to
pass through easily
LAY3 It is easy to walk around this store .78 .40 8.68 .60
and find what you are looking for
LAY4 The stores layout allows me to
move around easily
LAY5 The signs in the store provide .83 .31 9.57 .69
adequate direction
Fit*: Chi-Square 25.48, df 19, p-value 0.14537, RMSEA 0.060, SRMR .038, GFI .98,
NFI .97, CFI .99, CR .78, AVE .55, Cronbach’s Alpha, .735
* tested with Design factor
Table 6.1 Layout
In their research Wakefield and Blodgett (1996), Wakefield and Baker (1998) and
Kim and Moon (2009) found layout to be a separate factor to other factors within the
servicescape construct. The three layout items found for the layout factor coincide
with Kim and Moon’s (2009) research. Brady and Cronin (2001) and Pollack (2009)
also examined three items which they called design, however two of the items
specifically asked about the layout and one item was a general design item.
Furthermore, these items were related to a quality design as opposed to
environmental stimuli. Design will be looked at next and its distinctiveness from the
layout factor is examined.
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6.6.1.2 Design
Initially design was run with the specified design items. DE1 had a R² of .12 and was
removed from further analyses. The fit statistics were excellent for this reduced
design factor. However each of these environmental stimuli factors are being
examined with the other environmental stimuli factors to determine the fit for the
customer environmental stimuli construct (see appendix 4). The inter-correlation
between design and colour was .99. This indicated that perhaps consumers did not
differentiate between the two factors. Crowley (1993) and Gorn et al. (2004) both
indicate that colour often makes the firms first impression and is incorporated into
the design of a facility. Verhoeven et al. (2006) also indicated that colour enhances
evaluation of the physical environment. The design items relate to décor and how the
store is visually appealing so it would make theoretical sense for colour and design
items to relate to a single factor. Therefore these constructs were merged and are
denoted by the term design in the combined factor.
The colour factor contained three items. When analysed in conjunction with other
environmental stimuli factors C1 appeared to crossload across many other factors
and for this reason was withdrawn from analyses. This resulted in five items being
examined for the merged design factor. This resulted in a poor fit, with a RMSEA of
.098. However through further analyses it came to light that DE3 had significant
crossloadings with both colour items and was subsequently removed. This gave an
excellent fit for the revised design factor, as per table 6.2.
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Loading Variance
C1 The colours used create a pleasant
atmosphere
C2 The colour scheme in the store is .79 .37 9.07 .63
attractive
C3 The use of colour in the decor .78 .40 8.83 .60
scheme adds excitement to this
store environment
DE1 The materials used inside the store
are pleasing & of high quality
DE2 This store is decorated in an .82 .33 9.83 .67
attractive fashion
DE3 The interior décor of this store is
attractive.
DE4 The store understands that the .77 .41 8.70 .59
design of its facility is important
to me.
DE5 The interior design is visually .91 .17 11.30 .83
appealing
Fit: Chi-Square 2.4, df 5, p-value 0.79218, RMSEA 0.000, SRMR .015, GFI .99, NFI
.99, CFI 1, CR .9, AVE .66, Cronbach’s Alpha .90
Table 6.2 Design
As noted in the servicescape chapter, see chapter 3, design is often looked at within a
general factor called atmospherics, facility aesthetics or even layout and
functionality (Hightower et al., 2002, Davies and Tilley, 2004, Kim and Moon,
2009). Bitner (1992) herself did not differentiate between design and layout. The
combined design and colour items that were renamed design for this research
highlight that it is a separate factor to layout. Kim and Moon (2009) found their
factor called ‘facility aesthetics’ contained two design and two colour items and one
item relating to attractiveness of the restaurant. Their factor coincides with the
design factor. Furthermore Davies and Tilley (2004) and Gorn et al. (2004)
concurred that colour is related to design of interior stores and often makes the first
impression.
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6.6.1.3 Cleanliness and Olfaction
Based on previous research, reveresed items were used in the study (Harris and
Ezeh, 2008). However CLEAN1R and CLEAN4R were the two items that were
reversed and caused significant problems. The R² were all exceptionally poor, .23
and .093. As such these two items were deleted from further analysis, leaving two
cleanliness items. These are CLEAN2 and CLEAN3. CLEAN2 crossloaded across
music items and theoretically there was no justification for this. CLEAN2 was then
deleted from analyses.
CLEAN3 relates to maintaining clean food environments. Within a supermarket
environment context clean foodservice areas could impact the present of scent.
Unclean food service areas could lead to unpleasant food odours. Knasko (1995)
believes that malodours tend to impact avoidance behaviours. According to Gulus
and Bloch (1995) ambient scent must be apparent in the service environment in order
to influence behaviour. Within the literature, research on ambient scent is limited
(Gulus and Bloch, 1995, Bone and Ellen, 1999) and research is often experimental in
nature (Mattila and Wirtz, 2001, Spangenberg et al., 2005). It is sometimes examined
as one single item relating to a general ambient conditions factor ( Hightower et al.,
2002, Kim and Moon, 2009).
Harris and Ezeh (2008) used two items for their aroma factor and four items for their
cleanliness factor. Their research was on restaurants where cleanliness could be
examined in the bathroom area; however this was not relevant for a grocery retail
store. They found the cleanliness and olfaction to be separate factors. Miles et al.
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(2012) research contained six cleanliness items. Two of these items related to
spending time in the facility and four items were very similar to Harris and Ezeh
(2008).
From a theoretical viewpoint it was deemed appropriate to include the cleanliness
item of CLEAN3 with the olfaction items. The four items for olfaction did not
represent a good fit on their own. When examined with the other factors O1 had
significant cross loadings across design and layout. Theoretically this could not be
justified and thus it was removed from further analysis. This resulted in an excellent
fit for the revised olfaction factor, as per table 6.3

Loading Variance
CLEAN3 The store maintains clean food .72 .49 7.74 .75
service areas
CLEAN2 The store has clean aisles and
exits
O1 The store has a pleasant smell.
O2 The aroma in this store is pleasant. .87 .25 10.16 .65
O3 The aroma in the store is fitting. .81 .35 9.15 .51
Fit*: Chi-Square 2.63, df 4, p-value 0.62098, RMSEA 0.000, SRMR .015, GFI .99, NFI .99, CFI
1, CR .84, AVE .64, Cronbach’s Alpha .83
* tested with lighting factor
Table 6.3 Olfaction
6.6.1.4 Music
Throughout the literature, music is the most researched out of all Bitner’s (1992)
servicescape factors (Turley and Milliman, 2000). However it is most often
researched by itself or contained as a single item in a general atmospheric factor.
Harris and Ezeh (2008) examined music with other factors and found it to be
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separate from other environmental stimuli, such as layout and olfaction. The three
music items had a good fit which coincides with Harris and Ezeh (2008) music
factor, as per table 6.4

Loading Variance
M1 The music played in the store is .67 .56 8.57 .44
pleasant
M2 The music in the store is played at an .87 .24 10.86 .76
appropriate volume.
M3 The music played in the store is .77 .40 7.43 .60
appropriate.
Fit*: Chi-Square 9.85, df 8, p-value 0.27593, RMSEA 0.049, SRMR .036, GFI .97 NFI .98, CFI
.99, CR .81, AVE .59, Cronbach’s Alpha .82
* Tested with olfaction factor
Table 6.4 Music
6.6.1.5 Lighting
Similarly to colour, olfaction and music, lighting is often researched as part of an
overall ambient or atmospheric factor, consisting of one item in the factor
(Hightower et al., 2002, Jang and Namkung, 2009, Kim and Moon, 2009). L1 was
deleted from the lighting factor because it had an R² of 0.26. This left two items for
lighting. Though not ideal to have two items representing a factor, it was deemed
acceptable to have two item for the factor as Harris and Ezeh (2008) had two items
for their aroma factor and Pollack (2009) had two for his physical environment
quality factor. Lighting had an excellent fit, as per table 6.5
282
Loading Variance
L1 The overall lighting level in the store
is appropriate
L2 The lighting creates a comfortable .86 .27 9.77 .73
atmosphere
L3 The lighting is excellent at the store. .84 .29 9.57 .71
Fit: Chi-Square 2.63, df 4, p-value 0.62098, RMSEA 0.000, SRMR .015, GFI .99 NFI .99, CFI
* examined with Olfaction factor
Table 6.5 Lighting
6.6.1.6 Second Order Factor Model of the Customer Environmental Stimuli
After deleting items, LAY1, LAY4, C1, DE1, DE3, O1, CLEAN1R, CLEAN2,
CLEAN4R, and L1 there were 16 items to examine within the five factors that were
found. As noted these factors relate to different dimensions that form an overall
impression of the customer environmental stimuli. The next stage was to examine
the entire customer environmental stimuli construct and its sub-factors. A second
order factor analysis was tested for. A second order factor is present when a first
order factor is explained by some higher order factors (Schumacker and Lomax,
2004). It can be used to test the reliability and validity of the environmental stimuli
construct. In this case the five sub–factors relating to Bitner’s (1992) servicescape
dimensions, design factor , music factor, lighting factor, olfaction factor and layout
factor were all included. The second order model had a very good fit, apart from the
RMSEA which was at an acceptable level of .076. The fit indices were as follows,
Chi-square 153.80, df 99, p-value .00035, SRMR .054, NFI .95 and CFI .97 and is
presented diagrammatically in figure 6.1.
283
Having confirmed the sub-factors in the second order factor model, the items were
aggregated in SPSS to form the sub-factors of the customer environmental stimuli
construct. The model was than re-examined in LISREL, as per figure 6.2. See table
6.6 for model fit. The RMSEA was very poor for the model, at .145. This is
surprising as the second order model had an acceptable fit. This could be due to the
data being aggregated at the first step of analysis and then it is being aggregated
again in this second stage of analysis (when examining the employee environmental
stimuli second order model, the RMSEA improved when the data was aggregated).
Construct Sub-Factor Standardised Error t-value R²

Loading Variance
Customer Design Factor .95 .10 12.32 .90

Environmental Olfaction Factor .80 .37 9.24 .63
Stimuli Music Factor .72 .48 8.04 .52
Lighting Factor .85 .28 10.17 .72
Layout Factor .84 .29 10.08 .71
Fit: Chi-Square 15.12, df 5, p-value 0.00988, RMSEA 0.145, SRMR .032, GFI .94, NFI .96, CFI
.97, CR .91, AVE .69, Cronbach’s Alpha .91
Table 6.6 Customer Environmental Stimuli Construct
284
.67 M1
.81
M2
Music .84
M3
.60 LAY2
.78 LAY3
.81 Layout
.82
LAY5
.93
L2
.86
Customer .84 L3
.93 Lighting
Environmental
Stimuli .79 C2
.99 C3
.78
.83 DE2
Design .80
.87 DE4
.88
DE5
.78
O2
Olfaction .90
O3
Figure 6.1 Customers Second Order Factor Model .71
285 CLEAN3
All other fit indexes are very good. Also as the second order model was acceptable,
all factors remained for further analysis. Furthermore, as previously noted
Schumacker and Lomax (2004) suggest not relying on one fit index to make
judgements.
When analysing the customer environmental stimuli construct, it was found that
removing the lighting factor that the RMSEA was greatly reduced to .077. However
there was no theoretical justification for this and rather than let statistics drive the
analysis the lighting factor sub-factor remained. Furthermore by retaining lighting
factor symmetry was formed with the employee environmental stimuli construct,
which will be looked at next.

Music
factor
.72 Layout
factor
.84
Customer
.85 Lighting
Environmental
factor
Stimuli
.95
.80 Design
factor
Olfaction
factor
Figure 6.2 Customer Environmental Stimuli Construct after Aggregation
286
6.6.2 Employee Environmental Stimuli
There is very limited literature relating specifically to employee environmental
stimuli in service settings (Parish et al., 2008, Skandrani et al., 2011). Skandrani
(2011) carried out qualitative research and Parish et al. (2008) looked at old and new
service environments. However Parish et al. (2008) did not examine the factors that
made up the service setting but rather examined environmental perceptions of
convenience, safety and pleasantness of old and new environments.
In order to examine employee environmental stimuli, the same items that were used
for the customer environmental stimuli were used. Davis (1984) proposed that the
physical work environment could be classified into three main elements, (1) physical
structure, (2) physical stimuli, and (3) symbolic artefacts. This ties in with Bitner’s
(1992) three environmental dimensions used to classify a servicescape,
space/function, ambient conditions and symbols & artefacts. Bitner (1992) herself
also does not differentiate between factors for employees and customers. The only
slight word change throughout the items was if they related to shopping. The word
‘shopping’ was used for the customer items and the word ‘working ’was used for the
employee items. Employees and customers are in the same service environment so it
was theoretically sound to examine the same in store environmental stimuli.
Similarly to the customer environmental stimuli single factor analysis, the employee
environmental stimuli were initially run as a single factor analysis. It included the
elements of design, colour, cleanliness, music, lighting and olfaction. Some Fit
statistics for this model were acceptable with a significant chi square 708.20, df 299,
287
p-value .0000 and SRMR .077. However the RMSEA was .119, which does not meet
the criteria standards for adequacy of fit. Furthermore some items had R² lower than
.3. This suggests that perhaps this model has been mis-specified. Each of the sub-
factors of the employee environmental stimuli construct will be looked at next. To
differentiate between customer factors and employee factors ‘E’ will be used before
the factors for employees.
6.6.2.1 Employee Layout (E-layout)
Similarly to the customer layout item, LAY1, ELAY1 had a R² that was .13. This is
exceptionally poor. It would appear that the wording of this question was
problematic for both employees and customers. This was deleted from further
analysis. ELAY4 was found to have significant cross loadings with ELAY2 and
LAY5 and was thus removed from analysis. Again this corresponded with the
customer layout items of LAY2 and LAY5, this could suggest that the wording was
not appropriate for the LAY4 or ELAY4 item. This led to a very good fit, as per
table 6.7.
288
Loading Variance
ELAY1 The store layout never fails to
impress me
ELAY2 In this store, the aisles between the .64 .59 6.65 .41
shelves are wide enough to pass
through easily
ELAY3 It is easy to walk around this store .83 .31 9.43 .66
and find what you are looking for
ELAY4 The stores layout allows me to move
around easily
ELAY5 The signs in the store provide .82 .33 9.22 .69
adequate direction
Fit*: Chi-Square 28.78, df 26, p-value 0.32115, RMSEA 0.033, SRMR .042, GFI .98, NFI
.97, CFI .99, CR .81, AVE .59, Cronbach’s Alpha .71
* tested with Employee Design factor
Table 6.7 Employee Layout (E-layout)
6.6.2.2 Employee Design (E-design)
Initially E-design was run with the specified five E-design items. The fit indexes
were poor for the E-design factor with an RMSEA of .124. Similarly to the customer
design factor, when E-design was examined with the employee colour items in SPSS
it was clearly a one factor solution. Based on theoretical insights from the literature,
E-design items and employee colour items were merged and denoted as E-design in
the combined factor.
The employee colour factor contained three items. When analysed in conjunction
with other environmental stimuli factors EC3 appeared to crossload across the
employee music factor as well as some of the E-design items and for this reason was
withdrawn from the analysis. This resulted in seven items within the merged E-
design factor. This resulted in a poor fit, with an RMSEA of .128. However through
further analyses it came to light that EDE2 had significant crossloadings with both
289
colour items and was subsequently removed. This gave an excellent fit for the
merged E-design factor, as per table 6.8 below. The E-design factor contains slightly
different items to the customer design factor. EDE1 relates to materials that are used.
Customers did not find DE1 to be part of the design factor. Whilst employees did not
find EC3, colour adding excitement to the store, related to E-design they did find that
EC1 was related. This may be due to employees spending more time in the
environment and do not find the colour adds excitement. Though EDE1 had a low R²
of .35, this is only slightly deviated from .40. Similarly to Homburg et al. (2011) this
item was kept in the model to preserve conceptual comprehensiveness. This gave an
excellent fit, as per table 6.8.

Loading Variance
EC1 The colours used create a pleasant .84 .29 9.87 .71
atmosphere
EC2 The colour scheme in the store is .85 .27 10.11 .73
attractive
EC3 The use of colour in the decor
scheme adds excitement to this
store environment
EDE1 The materials used inside the store .59 .65 6.12 .35
are pleasing & of high quality
EDE2 This store is decorated in an
attractive fashion
EDE3 The interior décor of this store is .82 .33 9.50 .67
attractive.
EDE4 The store understands that the .68 .54 7.27 .46
design of its facility is important
to me.
EDE5 The interior design is visually .73 .47 7.98 .53
appealing
Fit: Chi-Square 7.46, df 9, p-value 0.58975, RMSEA 0.000, SRMR .031, GFI .97 NFI
.98, CFI 1, CR .88, AVE .57, Cronbach’s Alpha .88
Table 6.8 Employee Design (E-design)
In their research Baker et al. (1988) examined a general aesthetics factor. This
contained elements relating to design, colour and décor but also contained elements
290
relating to atmosphere, money spent and windows. Though it contains some items
that could be seen to be similar, such as ‘warm colors (such as shades of red or
orange) should predominant in a bank rather than cool colors (such as shades of blue
or green) [or] art work (pictures or other wall décor) should be used in the bank’
(Baker et al., 1988, p. 38), it was considered not to be in keeping with the Edesign
factor.
6.6.2.3 Employee Clean and Olfaction (E-olfaction)
ECLEAN1R and ECLEAN4R were the two items that were reversed and caused
significant problems. The R² were both exceptionally poor at, .081 and .079. As such
these two items were deleted from further analysis. This was similar to the customer
cleanliness items. The two remaining employee cleanliness items were examined
with olfaction as this made theoretical sense in a grocery retail setting. This merged
the employee cleanliness and E-olfaction items and was renamed the E-olfaction
factor. There were 5 items in this factor and it had an acceptable fit with the RMSEA
of .076. However after careful analysis EO2 appeared problematic when examined
with other factors and was taken out of analysis. This resulted in an excellent fit for
the merged E-olfaction factor. ECLEAN3 had a R² just outside the recommended .4
but was kept in the analyses as recommended by Homburg et al. (2009). This gave
an excellent fit, as per table 6.9
291
Loading Variance
ECLEAN2 The store has clean aisles and exists .71 .49 7.42 .51
ECLEAN3 The store maintains clean food .63 .61 6.30 .39
service areas
EO1 The store has a pleasant smell. .85 .28 9.30 .72
EO2 The aroma in this store is pleasant.
EO3 The aroma in the store is fitting. .74 .45 7.84 .55
Fit: Chi-Square 2.11, df 2, p-value 0.34890, RMSEA 0.023, SRMR .024, GFI .99 NFI .99, CFI
Table 6.9 Employee Olfaction (E-olfaction)
E-olfaction was slightly different to the customer olfaction factor. ECLEAN2 was
relevant for employees though CLEAN2 was not included in the Olfaction factor for
customers. EO1 and EO2 are very similar items as are O1 and O2. For the Olfaction
factor both items relating to aroma, O2 and O3, were included but for the E-olfaction
factor, EO1 and EO3 are included.
6.6.2.4 Employee Music (E-music)
Employees questioned the research team what the difference was between EM1 and
EM3. This was not surprising as it was asking if you thought the music was pleasant
and if it was appropriate. When first examined E-music did not have a good fit and
as a result an error covariance was permitted for EM1 and EM3, as employees did
not perceive a difference between the two and they appeared to highly correlate.
However when further examined, EM1 had a low R² of .25 if allowed to correlate
with EM3. EM1 was then taken out of the analyses due to its low R². An acceptable
level of fit was found for the two item scale. The AVE was .49, though the cut-off
point it .5 but just below the requirement for reliability. Similarly Cronbach’s Alpha
was .65, near the cut of point of .7. See table 6.10 for model fit.
292
Loading Variance
EM1 The music played in the store is
pleasant
EM2 The music in the store is played at an .71 .50 6.22 .50
appropriate volume.
EM3 The music played in the store is .69 .52 6.08 .48
appropriate.
Fit*: Chi-Square 25.49, df 19, p-value 0.14519, RMSEA 0.060, SRMR .045, GFI .94 NFI .96,
CFI .99, CR .65, AVE .49, Cronbach Alpha .65
* Tested with Employee Design factor
Table 6.10 Employee Music (E-music)
Music is one of the few areas of environmental stimuli that has been researched in
relation to employee behaviour. Baker et al. (1988) included a music item within
their ambient factor and Newman et al. (1966) looked at music on employee
productivity. Newman et al. (1966) research contained 20 items relating to music but
was an experimental design. The two E-music items used for this research did not
relate to either study. The E-music factor was similar to the customer’s music factor
found. However the music factor contained three music items whilst E-music
contained two items. Both E-music items that were included for further research
related to the appropriateness of the music. Most recently Skandrani et al. (2011)
found music to be an important environmental stimuli for employees. However their
research was qualitative in nature and does not allow for direct comparisons.
6.6.2.5 Employee Lighting (E-lighting)
ELI1 was deleted from the lighting factor because it had an R² of 0.11. E-lighting fit
statistics were excellent when examined with E-olfaction, as per table 6.11.
293
Loading Variance
EL1 The overall lighting level in the
store is appropriate
EL2 The lighting creates a comfortable .89 .20 9.77 .80
working atmosphere
EL3 The lighting is excellent at the .89 .21 9.57 .79
store.
Fit*: Chi-Square 7.21, df 8, p-value 0.51377, RMSEA 0.000, SRMR .030, GFI .98 NFI .98,
CFI 1.00, CR .88, AVE .79, Cronbach’s Alpha .88
*Tested with Employee Olfaction factor
Table 6.11 Employee Lighting (E-lighting)
Baker et al. (1988) had one lighting item that was a part of their ambient factor. This
related to the lighting being bright. Their ambient factor does not relate to the E-
lighting factor found. Oldham and Rotchford (1983) suggested darkness as a general
office characteristic which related to illumination levels and wall colours. However it
was the researcher who evaluated the characteristics of the office and not the
employees themselves.
6.6.2.6 Second Order Factor Model of the Employee Environmental Stimuli
In summary, ELAY1, ELAY4, EC3, DE2, ECLEAN1R, ECLEAN4R, EO2, EM1
and EL1 were deleted from further analysis and this left 17 items. Similarly to the
customer environmental stimuli construct, the next stage was to examine the entire
employee environmental stimuli construct with its sub-factors. As noted with the
literature chapter these factors relate to Bitner’s (1992) servicescape construct and
related to the Davis (1984) proposed framework from the work climate literature.
The E-design factor, E-music factor, E-lighting factor, E-olfaction factor and E-
layout factor were all included and the second order model had a good fit, as per
294
figure 6.3 below. The fit indices were as follows, Chi-square 168.21, df114, p-value
.00073, RMSEA .070, SRMR .056, NFI .95, CFI .98.
Having confirmed the items for each of the sub-factors for employee environmental
stimuli construct, the items were aggregated in SPSS to form the sub-factors and
retested in LISREL. See table 6.12 and figure 6.4. This resulted in an excellent fit.
Construct Sub-Factor Standardised Error t-value R²

Loading Variance
Employee E-design Factor .91 .16 11.39 .84

Environmental E-olfaction Factor .85 .28 10.08 .72
Stimuli E-music Factor .59 .65 6.19 .35
E-lighting Factor .82 .32 9.64 .68
E-layout Factor .79 .38 9.01 .62
Fit: Chi-Square 1.16, df 5, p-value 0.94912, RMSEA 0.000, SRMR.011, GFI 1.00, NFI 1.00,
Table 6.12 Employee Environmental Stimuli Construct
295
.73 EM2
.67 EM3
E-music
.66 ELAY2
.83 ELAY3
.81
ELAY5
.71 E-layout
ELI2
.88
.90 ELI3
.85
Employee
Environmental E-lighting .87 EC1
.89
Stimuli .84 EC2
.62 EDE1
.98 .78 EDE3
E-design .69 EDE4

.72 EDE5
.92
.83 EO1
E-olfaction .71 EO3
.75
CLEAN2
Figure 6.3 Employee Second Order Factor Model 296 .65
CLEAN3
E-music
factor
.60 E-layout
factor
.79
Employee
.84 E-lighting
Environmental
factor
Stimuli
.81
.82 E-design
factor
E-olfaction
factor
Figure 6.4 Employee Environmental Stimuli Construct after Aggregation
E-lighting had appeared problematic with other factors when examined (see
appendix 4). Similarly the lighting factor for customers impacted on RMSEA for the
second order factor model. It is worth noting that lighting was problematic for both
employees and customers. Both E-lighting factor and lighting factor contained the
same items and were both a two item factor. E-music factor was also a two item
factor and had a low R² of .35. As mentioned having a factor with only two items is
not ideal and this may be why these three, lighting, E-lighting and E-music factors
did not fit the data as well as other factors that contained more than two items.
However, it was deemed acceptable to include them in the analysis as they are
297
theoretically insightful and research has used two factor items in the past (Harris and
Ezeh, 2008, Pollack, 2009).
It should be noted that employee responses had not been aggregated before this point
of analysis, whilst customer responses had. This resulted in customer responses
being aggregated twice. This may contribute to the poor RMSEA of .145 for the
customer environmental stimuli model and not for the employee environmental
stimuli model. As noted, the second order model for Customer environmental stimuli
model was at an acceptable level of RMSEA of .076, as per figure 6.1.
6.6.3 PAD Customers
It was noted early on that PAD may be problematic for analysis Firstly, the layout of
the questionnaire may have influenced customer responses, even though good
practice in instrument design suggests mixing types of questions to mitigate
respondent fatigue (MacKenzie and Podsokoff, 2012). Customers found the Likert
scales were easy to understand but when it came to the end of the questionnaire,
having spent some time on answering Likert style questions, customers were
confused by the semantic scaling. Secondly, the nature of the utilitarian environment
may have been problematic as customers may not have experienced emotional
responses in a grocery retail environment as they may do in hedonic environments.
However, as customers spend longer in this type of utilitarian environment compared
with petrol stations or dry cleaners, it was felt important to examine the PAD in a
grocery retail context.
298
When data was being imputed it was found that many customers did not answer the
PAD questions and had left them blank. Due to the level of missing data on this
question it was not suitable to aggregate customer responses to the employee level. It
was found that 86 cases were missing above 50% of the PAD items. Table 6.13
identifies the level of missing data that occurred for each item of PAD at the
customer level.
Pleasure P1 P2 P3 P4 P5 P6
Items
Missing cases 2% 10.6% 10.6% 10.5% 9.3% 8%
Arousal A1 A2 A3 A4 A5 A6
Items
Missing cases 6.4% 12.4% 10.2% 10.9% 7.6% 11.5%
Dominance D1 D2 D3 D4 D5 D6
Items
Missing cases 10.2% 8.4% 7.8% 11.6% 9% 10.1%
Table 6.13 % of Missing cases of PAD for customers
Another difficulty in assessing the PAD may have been due to the type of service
that was being examined. As mentioned in Chapter 1 services can be hedonic or
utilitarian in nature. Though customers can spend considerable time in a grocery
retail store environment they are not driven by emotional motives in this utilitarian
environment. Customers are there to fulfil a need in an efficient and deliberate
manner (Babin et al., 1994). Research that has found some dimensions of the PAD to
be useful have focused on environments that can be considered more hedonic in
nature due to consumers being recreational shoppers; CD store (Tai and Fung, 1997),
gift shop (Mattila and Wirtz, 2001), shopping mall (Chebat and Michon, 2003),
theme parks (Bigné et al., 2005) and restaurants (Kim and Moon, 2009).
299
In examining furniture stores and garden stores Kenhove and Desrumaux (1997)
indicated that their CFA showed serious problems concerning unidimensionality of
their pleasure and arousal dimensions and found them to be highly correlated. Gilboa
and Rafela (2003) identified arousal, pleasure and dominance in their research on
grocery stores but used laboratory methods in their research. Machleit and Eroglu
(2001, p. 103) conducted research on a mix of hedonic and utilitarian service
settings, grocery stores, malls, department stores, bookshops and asked customers to
‘think back to the atmospheres of the store’. They were able to identify the three
PAD dimensions but their research focussed solely on emotional measures and used
both hedonic and utilitarian settings.
Due to these complications in collecting the data and the nature of the utilitarian
service environment, there were difficulties in analysing the PAD for customer
respondents. The customer PAD factors were not identified for this research. This
led to the hypotheses 11, 12 and 13 not being examined for this research.
6.6.4 PAD Employees
For employees there was significantly less missing data than for customers. Of
particular interest is the layout of the PAD question on the employee questionnaire.
For employees it was at the beginning of the questionnaire. Employees may have
spent more time reading it and were able to answer it due to it being at the beginning
of the questionnaire. Only 4 employees were missing above 50% of the PAD items.
Though there was a significantly small quantity of missing data for employees there
were still difficulties in identify the PAD dimensions.
300
Firstly, though employees had a better response than customers deletion of employee
responses would have left too few dyadic data for the rest of the model. It was
essential to retain as many employees as possible to match with customers. As the
missing data on employee questionnaires were focussed on the PAD questions alone
it was not deemed appropriate to delete employee responses.
A separate analysis was done looking solely at the employee and manager responses
on the PAD dimensions. This was done in SPSS as LISREL 8.8 did not provide
meaningful results because the model failed to converge. There were 27 managers
that could not be matched with customers as they had not been working on the tills.
However they answered the same questions as the employees who were working on
the tills. This resulted in a data set of 130 in total. Exploratory factor analysis was
carried out to identify the factors. According to Newman (2007, p. 22) ‘an
orthogonal Varimax rotation facilitates the identification of a simple but meaningful
structure of factors.’ Initially four factors were identified that contained a mix of the
items belonging to the three dimensions of PAD. There was no theoretical
justification for the four factors and further analysis was carried out.
Each theoretically proposed dimension was examined as its own factor. Dominance
formed a two factor solution, with two of the reversed items, D3R and D4R, forming
their own factor. These were removed which resulted in what appeared to be a
reasonable 4 item factor. However D6R was a reversed item and even though it had
been recoded it was appearing as a negative covariance among the other three items.
There was no theoretical justification for this and it was removed, resulting in a three
item factor for dominance. This dominance dimension had a Cronbach’s Alpha of
301
.68, just below the recommended cut off of .7. All communalities were above .599
and item loadings are shown in table 6.4.
Dominance Item loadings

D1 .781
D2 .774
D5 .789
Table 6.14 Dominance for Employees
The pleasure dimension appeared to be a single factor with all six items. The
Cronbach’s Alpha was excellent at 0.891 and communalities were all above .46. See
table 6.15 for item loadings.
Pleasure Item loadings

P1 .835
P2R .682
P3R .892
P4R .733
P5 .832
P6 .871
Table 6.15 Pleasure for Employees
The arousal dimension was more complex and formed a two factor solution, though
there was no clear theoretical justification for why this would happen. EA5 had a
negative correlation and as there was no justification for this, it was deleted from
further analysis. EA6 crossloaded across both factors and was deleted. This left a
two factor solution for arousal. See table 6.16. Communalities were above .585,
however the Cronbach’s Alpha for arousal (1) was .229 and for arousal (2) was .823,
thus suggesting that arousal (2) was more reliable than arousal (1).
302
Arousal (1)
A1 .748
A3 .781
Arousal (2)
A2 .912
A4 .910
Table 6.16 Arousal for Employees
Having explored the factors and identified three, further analysis was carried out to
ensure that they were separate factors. Table 6.17 shows the results of the rotated
component matrix when the three proposed factors are examined together.
Component
1 2
A2 -.641 .499
A4 -.686 .463
D1 -.495 .635
D2 .854
D5 -.408 .610
P1 815
P2R .533 -.513
P3R .779 -.466
P4R .671
P5 .830
P6 .840
Table 6.17 PAD for Employees
Table 6.17 illustrates the poor results for the PAD. There are no clear factors forming
and using reversed items appeared to cause difficulties in interpreting the data. In
their research Tai and Fung (1997) and Kim and Moon (2009) used Likert scales in
their approach to identifying the pleasure and arousal dimensions. Both researchers
found this to be an appropriate measure for the dimensions and were clearly able to
identify pleasure and arousal as separate factors. Future research should perhaps
consider this method as an alternative approach. Due to the above mentioned
303
complications in collecting the PAD data this led to difficulties in analysing the PAD
data. PAD factors were not identified for this research and will not be further
examined with the proposed model. This led to Hypotheses 11, 12 and 13 not being
examined.
6.6.5 Customer Satisfaction
The items for the customer satisfaction factor have been used frequently in past
research (Dietz et al. 2004, Homburg and Stock, 2004, Anselmsson, 2006). Time and
time again they have been validated and found to be very reliable (Dietz et al. 2004,
Chi and Gursoy, 2009, Wu and Liang, 2009). As noted the customer satisfaction
construct is a tried and tested measure. However there were considerable cross
loadings for CS1 and CS2 within LISREL. Within the questionnaire respondents
were asked to rate their satisfaction with the till operator. It was also observed that
many respondents found the item CS7 to be slightly problematic and was not directly
related to till operators. Respondents indicated to the research team that as they were
rating their satisfaction with the till operator, they did not feel that they were the ones
that resolved the problems if they arose. Initially analysis was run with all items for
CS but due to the considerable cross loadings CS1, CS2 and CS7 were then deleted
from further analysis. This led to an excellent fit, as per table 6.18.
304
Label Items Standardised Error t-value R²
Loading Variance
CS1 Providing fast service to me.
CS2 Being courteous and friendly
CS3 Providing an accurate service for .87 .25 10.53 .75
me
CS4 Willingness to help me .93 .13 11.96 .87
CS5 Making me feel secure about my .89 .21 10.95 .79
transactions.
CS6 Showing sincere interest in me .83 .31 9.88 .69
CS7 Resolving problems quickly for
me
Fit, Chi-Square 1.76, df 2, p-value 0.41377, RMSEA 0.000, SRMR .01, GFI .98, NFI
.99, CFI 1.00, CR .93, AVE .77, Cronbach’s Alpha .92
Table 6.18 Customer Satisfaction
As mentioned customer satisfaction is frequently researched. However a range of
items have been incorporated into the customer satisfaction factor. Hightower et al.
(2002) had an overall satisfaction factor which contained five items and related to
satisfaction at a game, Wangenheim et al. (2007) used a two item factor, with one
item related to behavioural intentions, Chi and Gursey (2009) used a three item
factor which looked at delight and expectations in a hotel stay, Yee et al. (2011) used
a four item factor, with one item relating to pricing, and Dietz et al. (2004) used a
seven item factor which examined satisfaction with bank tellers. Customer
Satisfaction in this study ended up with four items and was found to be highly
reliable.
Frequently in the literature an overall service quality factor is used, despite the
evidence that service quality is multidimensional (Pollack, 2009, Tortosa et al.,
2009). A one-factor model on which all 10 items loaded on the quality construct was
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examined first. As expected, fit statistics for this model were poor, chi-square
260.74, df= 27, p-value= .00000, RMSEA .300, thus indicating that it is potentially a
multidimensional factor.
Previous research has related service quality to elements of employee service quality
(Baker et al., 1994, Yee et al., 2011), interactive quality (Brady and Cronin Jr, 2001,
Tortosa et al., 2009) or overall quality (Reimer and Kuehn, 2005, Kim and Moon,
2009). This research termed this factor as Employee Quality. A second quality factor
that related to the overall design of the environment has been termed physical
environment quality (Brady and Cronin Jr, 2001) or tangible quality (Parasuraman et
al., 1988) was also included. For this research this was called Design Quality in
order to differentiate it from the environmental stimuli construct being examined. A
two factor solution was found consisting of Employee Quality items and Design
Quality items. The item QE3 was removed from analysis as it had considerable cross
loadings that had no theoretical justification, and it is likely that till operators cannot
offer much help to customers in a routine grocery shop. Employee Quality had an
acceptable level of fit, as per table 6.19.

Loading Variance
QE1 Employees give me personal attention. .90 .18 11.36 .82
QE2 I am treated well by employee .91 .17 11.46 .83
QE3 Employees are willing to help me
QE4 The store offers high-quality service .88 .23 10.76 .77
QE5 Employees are not too busy to respond .77 .40 8.90 .60
to me
QE6 I believe the store offers excellent .87 .25 10.61 .75
service.
Fit: Chi-Square 6.99, df 5, p-value 0.22157, RMSEA 0.064, SRMR .017, GFI .97, NFI .99,
CFI 1, CR .93, AVE .75, Cronbach’s Alpha .93
Table 6.19 Employee Quality
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Employee Quality related specifically to employees giving service to the customer.
Brady and Cronin (2001) used a two factor item for their service quality sub factor
and Baker et al. (1994) used a five item factor for their service quality inferences. Hu
and Jasper (2010) used a combination of items from both authors and had a six item
factor. The Employee Quality factor agrees with previous research and was found to
be very reliable.
Design Quality was the second factor relating to service quality. Brady and Cronin
(2001) and Pollack (2009) used the same two item factor for their physical
environment quality sub-factor. Chen et al. (2009) used a six item factor for their
environmental quality which they based from Brady and Cronin (2001). Design
Quality had an excellent fit and is in line with past research, as per table 6.20

Loading Variance
QD1 The arrangement of this stores .85 .27 9.95 .73
interior layout is better.
QD2 This store's aisles are more spacious .87 .24 10.31 .76
QD3 The design of this store's checkout .75 .44 8.25 .56
facilities is better
QD4 The design of this store's front is .75 .44 8.27 .56
better
Fit: Chi-Square 1.59, df 2, p-value 0.45260, RMSEA 0.000, SRMR .016, GFI .99, NFI .99,
Table 6.20 Design Quality
6.6.7 Customer Loyalty
Within the literature customer loyalty is considered to be a two factor construct. A
one-factor model on which all 9 items loaded on the customer loyalty construct was
examined first. As expected, fit statistics for this model were poor with Chi-Square
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of 120.09, df 27, p-value 0.00000 and RMSEA 0.190. A two factor solution, as per
the literature, was then run which was significantly better.
When first examined Customer Loyalty Behavioural (CLB) did not have a good fit.
An error covariance was permitted for CL5 and CL6, as customers did not perceive a
difference between the two and they appeared to highly correlate. This was not
surprising as it was asking if you would say positive things about the store (CL5) or
recommend the store (CL6), which participants perceived to be very similar
questions. Within the Customer Loyalty Attitudinal (CLA) factor, CL1 had
significant cross loadings across three of the CLA and CLB items. CL1 was taken
out and it was very encouraging that there were no cross loadings on the two factors.
This indicated that they were measuring two separate factors, attitude and behaviour
of the loyalty construct.
Zeithaml et al. (1996) proposed a five item behavioural loyalty factor. In later
research Harris and Ezeh (2008) postulated a single loyalty factor that contained six
items. This was their endogenous variable and they found it to be reliable. Though
they did not specify if they were looking at attitudinal or behavioural loyalty, the
majority of their items related to behavioural loyalty intentions as it was based on
research by Zeithaml et al. (1996). Similarly, Yee et al. (2011) use a five item factor
for their customer loyalty factor but do not specify if it is attitudinal or behavioural.
However their items relate to the behavioural loyalty factor as suggested by Zeithaml
et al. (1996). CLB has a very good fit and is in line with previous research, as per
table 6.21.
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Loading Variance
CL5* Say positive things about the store .88 .22 10.93 .77
to other people
CL6* Do more business with the store in .86 .25 10.62 .75
the next few months
CL7 Encourage relatives to do business .97 .05 13.08 .95
with the store
CL8 Encourage friends to do business .95 .10 12.51 .90
with the store
CL9 Recommend the store to someone .76 .43 8.66 .57
who seeks your advice
Fit: Chi-Square .62, df 4, p-value 0.96057, RMSEA 0.000, SRMR .0050, GFI .99, NFI 1, CFI 1,
CR .94, AVE, .78, Cronbach’s Alpha .95
* Error covariance set for CL5 and CL6, t-value 4.09
Table 6.21 CLB
As noted, considerable research focuses on a general loyalty factor even though the
literature has strongly theorised the loyalty factor to consist of two related but
distinct factors. However, Chen et al. (2009) specified that they were examining
attitudinal loyalty and used a three item scale that was based on Dick and Basu’s
(1994) conceptual framework relating to attitudinal loyalty. Harris and Ezeh (2008)
included an item under their loyalty factor that related to visiting the store even if
others are cheaper. Zeithaml et al. (1996) had not specified this in their behavioural
loyalty factor.
CL4 relates to visiting the store even if others are cheaper and is very similar to
Harris and Ezeh (2008) item, however it loads on the CLA factor. This research
examines both attitudinal and behavioural research whilst Harris and Ezeh (2008),
though they did not specify, concentrated on behavioural loyalty. When examined
with the CLB factor, CL4 does not load on the CLB factor but on the CLA factor.
CLA, has an excellent fit and corresponds with research by Chen et al. (2009). Table
6.22 shows the model statistics.
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Loading Variance
CL1 I am a loyal customer of this store
CL2 This store is the first choice for me .81 .34 8.89 .66
among the same types of stores
CL3 If there are two stores close to each .85 .28 9.46 .72
other and both of them have similar
products and prices, I will choose to
shop here
CL4 I will visit this store even if others are .78 .40 8.42 .60
cheaper
Fit*: Chi-Square 14.01, df 13, p-value 0.37341, RMSEA 0.028, SRMR .035, GFI .96, NFI .97,
* Tested with Customer Satisfaction factor
Table 6.22 CLA
6.6.8 Employee Satisfaction
ES8R was a reversed item and similarly to other reversed items had a low R² of .19
and was therefore deleted from further analysis. ES8R related to quitting ones job,
perhaps it is not surprising that this item was problematic as during the period of
research, March-April 2011, there was an economic downtown (ESRI, 2012). This
meant there were very limited job opportunities and people did not think about
switching their jobs. Furthermore this may have impacted ES2 which had a low R² of
.38. ES2 related to intending to work for a different company. As there were limited
jobs on offer or employees were treated well, employees may not have even
considered working for another company as an option. Both items were taken out of
the analyses after careful theoretical review. The CFA had a very good fit, as per
table 6.23
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Loading Variance
ES1 Generally Speaking, I am very .85 .27 10.31 .73
satisfied with this job
ES2 I do not intend to work for a different
company in the foreseeable future
ES3 I like my job .90 .19 11.25 .81
ES4 There are no fundamental things I .81 .34 9.56 .66
dislike about my Job
ES5 I like my job more than many .71 .49 7.89 .51
employees of other companies
ES6 I consider this employee as first .80 .36 9.36 .64
choice
ES7 I am generally satisfied with the kind .90 .19 11.27 .81
of work I do in this job
ES8 I frequently think of quitting this job
Fit: Chi-Square 10.02, df 9, p-value 0.34863, RMSEA 0.034, SRMR .022, GFI .97, NFI
.99, CFI 1.00, CR .93, AVE .69, Cronbach’s Alpha .92
Table 6.23 Employee Satisfaction
Similarly to the customer satisfaction factor, the employee satisfaction factor has
been used frequently in past research (Homburg and Stock, 2004, Wangenheim et
al., 2007, Homburg et al., 2009). Homburg and Stock (2004) used a six item factor to
measure job satisfaction, Chi and Gursoy (2009) used a four item factor which
appeared to be based on the Homburg and Stock (2004) research, Wangenheim et al.
(2007) used a three item factor and Homburg et al. (2009) used a three item factor
for job satisfaction. Kantabutra (2011) used a seven item factor, however this was
not similar to any of the other employee satisfaction factors mentioned.
6.6.9 Employee Loyalty
An error covariance was permitted for EL1 and EL5 as they highly correlated. The
items related to the store remaining a leading store (EL1) and the fate of the shop
(EL5). Employees perceived these two items to be very similar questions and were
311
allowed to correlate. Parish et al. (2008) allowed items to correlate in their research.
Though EL4 had a low R² it was kept in for further analysis to preserve the
conceptual comprehensiveness, similar to Homburg et al. (2009). This gave an
excellent fit, as per table 6.24

Loading Variance
EL1* Most of the time I am willing to put in
.84 .29 9.71 .71
extra effort so that the store remains a
leading store.
EL2 I speak highly of the shop in which I .78 .40 8.75 .60
work to my friends
EL3 I feel proud to work at this store .90 .19 10.91 .81
EL4 I would turn down a job with .57 .67 5.86 .33
comparable pay and career prospects
to stay at this store
EL5* I care about the fate of the shop in .85 .28 9.86 .72
which I work
Fit: Chi-Square 1.37, df 4, p-value 0.84987, RMSEA, 0.000, SRMR .012, GFI .99, NFI 1, CFI
* Error covariance set for EL1 and EL5, t-value 1.81
Table 6.24 Employee Loyalty
Similarly to employee satisfaction, employee loyalty is well researched in the
literature (Currivan, 1999, Gelade and Young, 2005, Paulin et al., 2006). Currivan
(1999) used a four item factor which they called organisational commitment, Paulin
et al. (2006) used a three item factor which they also called organisational
commitment and Gelade and Young (2005) used a three item factor called
commitment. Each of the items used in the studies were comparable and the
employee loyalty factor was in line with past research.
6.6.10 Financial Performance
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Data on the financial performance was collected from 27 managers of the stores and
was linked across the employee level of analysis. There were five items for the
financial performance factor. The RMSEA was very poor for the financial
performance factor at .189. The GROWTH item had a R² of .17 and was deleted
from further analysis. Removal of the item led to a worse RMSEA of .265
suggesting it could be a two factor measure: FOOT relating to the average footfall of
the store and the other three items related to sales, market share and scanning
margin.
Within the literature there has been many different ways to collect financial data.
Homburg et al. (2011) used a single item for price positioning, Maxham et al. (2008)
used the average transaction value of customers, Schneider et al. (2005) used actual
sales data and Yee et al. (2011) used return on sales, return on investment and return
on assets which was also used by Schneider et al. (2003). Past research has focussed
on sales, market share and scanning margin. These three items were examined and
found to have a good fit. Footfall had been included in this research based on the
interviews carried out with managers. Based on this Footfall was taken out and this
led to an excellent fit for the financial performance measure factor, as per table 6.25

Loading Variance
GROWTH The sales growth
SHARE The market share .82 .32 8.62 .68
PROFIT The profit growth .87 .23 9.26 .77
MARGIN The average scanning margin for .64 .59 6.57 .41
the store
FOOT The average footfall of the store
Fit*: Chi-Square 26.05, df 26, p-value 0.46039, RMSEA 0.004, SRMR .038, GFI .94, NFI .96,
* Tested with Employee Satisfaction factor
Table 6.25 Financial Performance
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6.7 Hypotheses Restatement
Having confirmed each of the factors in the proposed model through the use of CFA
in LISREL, the second stage of analysis was carried out as proposed by Anderson
and Gerbing (1988). The proposed model, as per figure 5.2 in chapter five, contains
the links in the proposed model that were to be examined. However, links relating to
the PAD were not examined. As highlighted, PAD was not identified due to the
utilitarian nature of the service environment and the difficulties in analysing the data.
Due to this the proposed hypotheses of 11a, 11b, 11c, 12a, 12b, 12c, 13a, 13b and
13c could not be examined. The proposed model without the PAD links is depicted
in figure 6.5.
Before examining the proposed model several adjustments to the hypotheses should
be highlighted. See table 6.26 for the revised list of hypotheses that were examined.
As mentioned, service quality was found to be two dimensional. This was a
significant finding resulting in H4, H5 and H9 being altered. H4, was reworded to
the following,
H4a Employee Loyalty is positively related to Design Quality
H4b Employee Loyalty is positively related to Employee Quality
Hypothesis 5 was reworded to,
H5a Design Quality is positively related to Customer Satisfaction
H5b Employee Quality is positively related to Customer Satisfaction
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Hypothesis 9 was reworded to,
H9a Environmental Stimuli are positively related to Design Quality
H9b Environmental Stimuli are positively related to Employee Quality
The model with the necessary changes to H4, H5, H9 and without the PAD is
displayed in figure 6.5.
Hypothesis Relationship Significance Standardised t-values

loadings
H1 Employee Satisfaction- Significant .76 7.18*
Employee Loyalty
H2 Employee Satisfaction – Significant - .26 1.76***
H3 Employee Loyalty- Customer Not .01 .11
Satisfaction significant
H4a Employee Loyalty –Service Not .09 1.10
Quality significant
H4b Employee Loyalty –Design Not -.12 1.27
Quality significant
H5a Design Quality – Customer Not .03 .21
Satisfaction significant
H5b Employee Quality – Customer Significant .62 5.07*
Satisfaction
H6a Customer Satisfaction - Significant .30 2.64**
Customer Loyalty Attitudinal
H6b Customer Satisfaction - Significant .37 3.57*
Customer Loyalty Behavioural
H7a Customer Loyalty Behavioural - Not .01 .05
Financial Performance significant
H7b Customer Loyalty Attitudinal- Not .21 .77
Financial Performance significant
H8 Employee Loyalty-Financial Not .11 .93
Performance significant
H9a Environmental Stimuli- Significant .73 6.94*
Design Quality
H9b Environmental Stimuli- Significant .60 5.91*
Employee Quality
H10a Environmental Stimuli – Not
Customer Satisfaction significant .15 .91
H10b Environmental Stimuli – Significant
Employee Satisfaction .73 6.96*
* significant at the p> .01 level, ** p> .05 level, *** p > .10 level
Table 6.26 List of Hypotheses and Significant Links
315
(S) (O) (R)
.76 (*7.18) Employee

Loyalty
Employee  Managers .09 (1.10)
.61 (*5.78)  Till Operators .11 (.93)
Environmental
.01 (.11)
Stimuli
Design -.12 (1.27)
Performance
.73 (*6.94) Quality (QD) -.01 (.05)
-.26 (**1.76) Measure
Customer
. Customer Loyalty
Environmental .60 (*5.91) Employee
.03(*.21) Attitudinal (CLA) .21 (.77)
Stimuli Quality (QE)
-.15 (.91) .62 (*5.07) .30 (*2.64)
Customer Customer Loyalty

.37 (*3.57)
Figure 6.5 Proposed Model Satisfaction Behavioural (CLB)
*p <.05 **p <.10
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In the proposed model the relationships shown in red are not significant. These are
highlighted in the model, see figure 6.5 and table 6.26. This shows that some of the
specified hypotheses are not supported. Based on this model with the insignificant
links the overall fit criterion was NFI .87, CFI .95, SRMR .15 and RMSEA .057.
The ratio of χ² 1209.29 over df 925 is 1.3. Except for the SRMR, all other fit
measures indicated an acceptable fit. Error covariance was set for CLA and CLB and
the t-value was 5.32. This was set as both CLA and CLB relate to customer loyalty
and a relationship between the two is expected. Parish et al (2008) also allowed
items to correlate in their research because of similarity.
6.8 Research Objectives Findings
Each of the hypotheses relating to the objectives will be examined in more detail
next. Once they have been examined the model will be rerun with the insignificant
links removed. This will provide a clearer representation of the model results.
6.8.1 Research Objective One Findings
Research objective one was to examine the links within the SPC. H1 proposed that
employee satisfaction positively impacted employee loyalty. This was the strongest
link in the model. Employee satisfaction explained 58% of the variance in employee
loyalty. Furthermore, employee environmental stimuli had a significant indirect
effect on employee loyalty through employee satisfaction. Employee environmental
stimuli accounted for 46% variance explained in employee satisfaction. Loveman
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(1998) found that employee stated loyalty was positively related to employee
satisfaction but did not find a relationship with employee tenure. Eskildesen and
Nussler (2000) using PLS found a significant positive relationship between
employee satisfaction and employee loyalty. This research agrees with previous
research in this finding.
H2 is the most commonly discussed and researched of the links within the SPC.
Evidence has suggested that the satisfaction mirror exists (Rucci et al., 1998, Wiley,
1991, Schneider et al., 2000). However, Silvestro and Cross (2000) who examine
grocery retailing did not find a significant link. Furthermore the majority of research
asks only customers or employees for their perceptions of the satisfaction link from
both perspectives. Dean (2004) highlighted the lack of account taken into
consideration of the complexity of many of the constructs in the SPC and that deeper
analyses is needed. Most insightful to the employee-customer satisfaction link has
been the use of dyadic data, where customer satisfaction ratings are taken from
customers and employee satisfaction ratings are taking from the employees. This
research is one of few studies inspecting the employee-customer satisfaction link
through the use of SEM and matching dyadic data.
Most notably in the dyadic data research is a study by Homburg et al. (2009) who
carried out research on the SPC and found no significant link for the proposed
employee-customer satisfaction link. Kantabutra (2011), who used triadic data,
found that staff satisfaction did not predict customer satisfaction. Wangenheim et al.
(2007) and Chi and Gursoy (2009) both found a positive link, however although they
318
collected data from both sides of the dyad neither research matched up employee and
customer responses.
This research found a significant link between employee satisfaction and customer
satisfaction but not as suggested by earlier research. H2 proposed that employee
satisfaction positively affected customer satisfaction. A small but significant
negative correlation was found between employee satisfaction and customer
satisfaction resulting in the H2 being disconfirmed. Due to the significance of this
finding, the employee satisfaction and customer satisfaction link was looked at
further in isolation.
In examining the employee satisfaction customer satisfaction link in isolation, the t-
value was 2.95, indicating the link was significant at p< .05 level. The fit statistics
for the model were excellent; NFI .97, CFI 1, SRMR .038 and RMSEA .000. The
ratio of χ² 32.70 over df 34 is .96. This would indicate that employee satisfaction
does not affect customer satisfaction positively but rather increased employee
satisfaction leads to decreased customer satisfaction. This is unusual and surprising
as one would theoretically presume employee satisfaction leads to customer
satisfaction.
As noted in chapter one, employee satisfaction relates to satisfaction with the job
(Babin and Boles, 1998). However it is also considered to be cognitive and affective
in nature (Mattila and Wirtz, 2006). Employees spend more time in the store and the
measure of employee satisfaction relates to a more cognitive measure of their
satisfaction with the job. Employees indicated they were satisfied with their job but
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did not indicate what their current emotional state was when interacting with the
customer. In examining the employee-customer link employee’s emotional state or
affective state should be further investigated. Employee’s emotional display at the
time of interaction should be examined. For example, in their research Groth et al.
(2009) examined deep acting (genuinely displaying emotions) and surface acting
(faking emotional display) of employees. They found (2009, p. 969) that ‘results
show that surface acting exerts negative effects when customers perceive it as such’.
Customers may found that if an employee appears extremely satisfied that it is not
genuine and this could cause negative affects for the customer. Hennig-Thurau et al.
(2006) who carried out research on emotional cognition and emotional labour found
that authenticity of employees emotional display rather than the extent of the display
influenced customers emotions.
Pritchard and Silvestro (2005, p. 350) caution judgements by indicating that ‘the
drivers of satisfaction may not necessarily be the same as the drivers of
dissatisfaction’. It would appear that the relationship between customers and
employees is more complex then literature suggests (Silvestro, 2002). There are
many other variables that should be taken into consideration when considering the
employee-customer satisfaction link. Deep acting, surface acting and emotional
labour (Hennig-Thurau et al., 2006, Groth et al., 2009) appear to play an important
role in understanding the complex relationship and were not examined in this
research. The nature of the service, hedonic or utilitarian, could also affect the link.
This research examined a utilitarian service and a hedonic service, where customers
seek experiential environments, could impact differently on the link, thus suggesting
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that employee satisfaction will lead to customer satisfaction is not an adequate
representation of the relationship.
Furthermore within the grocery retail industry there is trend towards less reliance on
employee customer contact with grocery chains are increasingly using self-service
tills (Silvestro and Cross, 2002). Silvestro and Cross (2002, p. 264) suggest that
‘even when staff have direct contact with customers, such as at the checkout,
customer priorities appear to be speed and accuracy of service rather than
friendliness and personal care.
H3 proposed that employee loyalty is positively related to customer satisfaction.
There was no significant relationship found. H4a and H4b related to employee
loyalty being positively related to employee quality and design quality. No direct
relationship was found either. Rust et al. (1996) proposed that a cycle of positive
interactions occurs between employees and customers. Hesket et al. (1994) also
proposed that employee loyalty relates to service quality and that service quality
impacts customers positively. Though theoretically sound, there is mixed research to
support these relationships. Loveman (1998, p. 25) highlighted in his research that
‘stated measures of employee loyalty do not appear to be significantly correlated
with customer satisfaction’. However he did note that employee tenure was
positively and significantly related to customer satisfaction. Pritchard and Silvestro
(2005) did find that service value and customer satisfaction were positively related to
employee loyalty, but highlighted that employee loyalty was measured in terms of
staff turnover. This was similar to Loveman’s (1998) findings. Neither study
examines employee stated loyalty as was examined in this research. Maxham et al.
321
(2008) highlighted that research examining the SPC has largely ignored employee
perceptions and their evaluations, but did not examine the direct relationship
between employee loyalty and customer satisfaction.
H6a and H6b relate to customer satisfaction positively affecting CLA and CLB.
There was a slightly stronger link between customer satisfaction and CLB than
customer satisfaction and CLA. Customer satisfaction explained 9% of the variance
for CLA and 14% for CLB. Research relating to customer satisfaction and customer
loyalty is primarily conclusive in nature. However the majority of research focuses
on the customer satisfaction and CLB link as opposed to customer satisfaction and
CLA link. Hallowell (1996) examined customer behavioural loyalty, and found a
positive relationship with customer satisfaction. Han and Ryu (2009) highlighted the
need for attention in examining attitudinal customer loyalty. They used SEM and
found a positive significant link between customer satisfaction and attitudinal
customer loyalty.
H7a and H7b related to CLA and CLB being positively related to financial
performance. Similarly H8 proposes how employee loyalty is positively related to
financial performance. There was no significant relationship for any of the
hypotheses. In the literature there is mixed results of, firstly how financial
performance should be measured and secondly if there is a direct link between
customer or employee loyalty and financial performance. As mentioned, managers
were cautious to give exact information, thus scales were used in the measurement of
the financial data, which may have impacted on the results. The research was carried
out during a global downturn which could also have impacted on the findings.
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H1, H2, H6a, H6b provided insight into the links within the SPC. Using dyadic data
provided a deeper understanding to the complex relationship between employee
satisfaction and customer satisfaction, a key accepted link within the SPC.
Furthermore a contribution was that employee loyalty could be explained by
employee job satisfaction. It was also found that employee environmental stimuli
had an indirect effect on employee loyalty. Objective three examines in more detail
the relationship between the environmental stimuli and employee responses but first
objective two will be examined.
6.8.2 Research Objective Two Findings
Research objective two related to evaluating the relationship between environmental
stimuli and service quality. A significant finding of this research was that service
quality was two distinct factors, design quality and employee quality. This resulted
in changes to several hypotheses; in particular H5 and H9 becoming H5a, H5b, H9a,
and H9b. H5a, H5b, H9a and H9b are closely related and will be looked at together.
A depiction of the relationship between H9a, H9b, H5a and H5b is given in figure
6.6.
Design
H9a H5a
Quality
Customer Customer
Environmental Satisfaction
Stimuli
H9b Employee H5b
Quality
Figure 6.6 H5a, H5b, H9a and H9b
Indicates no significant relationship found
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Tortosa et al. (2009) highlighted that service quality is based on customers
evaluation of customer–employee interaction, the physical environment and the
outcome. Though service quality has been considered to be multidimensional,
considerable research has focused on a general service quality factor (Lariviére,
2008, Yee et al., 2011). In the past elements of the environmental stimuli have been
incorporated into an overall service quality construct (Parasuraman et al., 1988,
Brady and Cronin Jr, 2001). Pollack (2009) incorporated three environmental stimuli
factors: design, ambient conditions and physical environment quality as proposed by
Brady and Cronin (2001) in their research on service quality. This suggests that
environmental stimuli forms part of the service quality construct. However Brady
and Cronin’s (2001) design sub-factor is almost identical to layout items that are
used for measuring the layout sub-factor of the environmental stimuli construct.
H9a proposed that environmental stimuli positively impacted design quality and this
was strongly supported. This clearly suggests that environmental stimuli are an
antecedent to design service quality rather than components of general service
quality. This contrasts with Brady and Cronin (2001) who suggested that the design
(which is very similar to the layout factor and E-layout factor in this research) sub-
factor is part of the service quality construct. Parasruaman et al. (1988) also
incorporated tangible elements in their service quality construct. This finding is more
in line with Reimer and Kuehn (2005) who found that the servicescape was an
indicator of service quality. Their service quality factor was a two item factor and
their servicescape factor contained 10 usable items. Baker et al. (1994) conducted
experimental tests and suggested that three dimensions for the environmental stimuli,
ambient, design and social factors, positively influenced service quality. Their
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service quality factor contained five items that related to employees and store
providing quality service. Baker et al. (1994) and Hooper et al. (2013) found that the
servicescape dimensions were separate to service quality and that factors of the
environmental stimuli preceded service quality. This research concurs with the above
past findings that environmental stimuli are an antecedent to both employee quality
and design quality.
H5a proposed that design quality would positively influence customer satisfaction.
This was found to be insignificant. At first this is surprising as H5b found that
employee quality had a significant effect on customer satisfaction. Tortosa et al.
(2009) who examined the relationship between physical environment quality and
customer satisfaction found no link between them, although they found a link for
quality of outcome and quality of interaction on customer satisfaction. Their quality
of interaction factor is very similar to the employee quality factor for this research.
They highlight that interaction with personnel and the outcome they receive is valued
by customers rather than quality of physical environment. This research corresponds
with both their findings.
Customers may be more aware of interaction with employees and the service quality
that they receive from employees within the service environment. Customers are
more aware of the quality they receive from employees as they would be talking or
directly interacting with employees. In this case, it was the till operators that were
the employees that customers were interacting with. Thus, customers may not
directly observe the quality of the design of the environment but rather their focus is
on the quality they receive from employees.
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Overall, research relating to service quality has found a positive link for a general
service quality factor impacting customer satisfaction. In their research on service
climate, which focussed on the impact of service quality on customer satisfaction,
Schneider et al. (2009) found that service climate significantly impacted on customer
satisfaction. Schneider and his colleagues had found similar results in the past
(Schneider and Bowen, 1985, Schneider et al., 1998). There is strong evidence in the
literature for the link of service quality and customer satisfaction (Lariviére, 2008,
Yee et al., 2010, 2011, Jayawardhena and Farrell, 2011, Hooper et al., 2013)
H9b related to customer environmental stimuli positively influencing employee
quality and H5b related to employee quality positively influencing customer
satisfaction. There is a strong and significant relationship between customer
environmental stimuli and employee quality, with employee quality being the key
determinant of customer satisfaction. This shows that there is a significant indirect
effect between customer environmental stimuli and customer satisfaction through the
mediating latent variable of employee quality. See table 6.27 for indirect effects.
Indirect Effects
Customer Employee
Environmental Environmental
Stimuli Stimuli
Customer .34 -.15
Satisfaction
CLA .10 -.05
CLB .13 -.05
Employee ---- .46
Loyalty
Table 6.27 Indirect Effects
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It is reassuring that both direct and indirect effects demonstrate the positive influence
of the environmental stimuli on behavioural intentions, for both customers and
employees. The R² values indicated that employee quality accounted for 31% of the
variance explained in customer satisfaction and that 36% variance in employee
quality is explained by the customer environmental stimuli. Indirectly customer
environmental stimuli accounts for 34% of the variance of Customer satisfaction.
Furthermore customer environmental stimuli had an indirect effect on CLB and CLA
accounting for 10% variance in CLA and 13% in CLB. This is particularly
meaningful as it provides a wider understanding of customer behaviours and the
influence that the environmental stimuli can have on customer loyalty, both
attitudinal and behavioural. Similarly employee environmental stimuli explained
46% of the variance in employee loyalty. This is an exceptionally high percentage
and clearly provides justification for a key theoretical argument formed in this
research, that environmental stimuli positively influence employees in their
behaviours. This ties the environmental stimuli with the SPC links, which were
discussed under objective one, this connection being a key theoretical contribution of
this research. Providing and demonstrating a deeper understanding of how the
environmental stimuli influence the links within the SPC is a key finding, which
relates to research objective three.
6.8.3 Research Objective Three Findings
Research objective three related to assessing the link between environmental stimuli
and the emotional responses of customers and employees. A significant link was
found for environmental stimuli having a positive effect on employees (H10b) but an
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insignificant link was found for customers (H10a). As mentioned, though a direct
relationship was not found for environmental stimuli affecting customers, an indirect
relationship through employee quality was found to be significant.
H10b proposed that employee environmental stimuli positively impact on employee
satisfaction. The R² values indicated that employee environmental stimuli accounts
for 37% of the variance explained in employee satisfaction. There is very little
empirical evidence in the literature relating to this link in service settings. Baker et
al. (1988) examined branch facility design but did not relate it to employee
satisfaction. Carlopio (1996) examined satisfaction with the physical environment in
mainly a goods manufacturing industry. They did not differentiate between the work
environmental stimuli and satisfaction factor, but rather incorporated it as one factor.
H10a proposed that the environmental stimuli construct, which consisted of design,
lighting, layout, music and olfaction factors, would have a positive effect on
customer satisfaction. No support was found for this link in the model. Previous
research has focused on single elements of the servicescape and there has been very
limited research examining all elements of the servicescape as proposed by Bitner
(1992). Research examines individual factors, such as music or colour, influencing
customer satisfaction through mediating variables such as, pleasure, arousal or
service quality. Morrison et al. (2011) examined how music and aroma positively
influenced customer satisfaction but through the mediating variables of pleasure and
arousal. Wakefield and Blodgett (1994, 1996) examined how servicescape
dimension influenced perceived quality which in turn positively influenced customer
satisfaction. Wu and Liang (2009) did investigate a direct relationship between what
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they called physical environmental factors and customer satisfaction. Their physical
environment factor consisted of a five item factor relating to one lighting item, one
temperature item, one cleanliness item, one colour item and an architecture item.
They found no significant direct relationship between their physical environmental
factor and customer satisfaction. However Wu and Liang (2009) found that the
relationship was mediated through value. Each of the authors have clearly stated that
factors of the servicescape influence customer satisfaction and is ‘crucial’ in
determining satisfaction, yet few have found a direct link.
Due to employees spending more time in the service environment (Parish et al,
2009), employees may be more aware of some aspects of the environmental stimuli.
This could perhaps explain why there is a significant link for environmental stimuli
impacting employee satisfaction directly and not for customers. Environmental
stimuli may not have a direct impact on customer satisfaction as customers may not
be fully aware that it affects them. It could affect their subconscious rather than their
conscious. As noted, there was a significant indirect relationship found between
customer environmental stimuli and customer satisfaction through the mediating role
of employee quality.
Due to the lack of research on examining the direct relationship between the global
configuration of the environmental stimuli on customer satisfaction, it was felt
further investigation was needed into this particular link of the overall model. The
environmental stimuli-customer satisfaction link was looked at in isolation. In
examining the link on its own, a positive significant link was found between
environmental stimuli and customer satisfaction. Overall the fit statistics were
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acceptable, Chi-square 49.32, df 26, p-value .00379, SRMR .060 NFI .94 and CFI
.96, except for the RMSEA of .097. See figure 6.7.
Music
factor
.72 (7.99)
Layout
factor
.84 (9.24)
.85 (10.08) Customer Customer

Lighting .27 (2.54*)
Environmental Satisfaction
factor
Stimuli
.95 (10.20)
Design
factor .80 (12.32)
Olfaction
factor
Figure 6.7 Customer Environmental Stimuli-Customer Satisfaction link in

Isolation
*All p <.05
The RMSEA is high, though considering that the customer environmental construct
had a high RMSEA perhaps this is not surprising. However, when the proposed
model is examined in its entirety the indirect link provides a significantly better
fitting model. This suggests that an indirect link between environmental stimuli and
customer satisfaction is perhaps more appropriate. This agrees with the literature in
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that the relationship between environmental stimuli and customer satisfaction is
mediated (Wakefield and Blodgett, 1994, 1996, Wu and Liang, 2009, Morrison et
al., 2012) in this case through employee quality.
Furthermore as highlighted in chapter one, customer satisfaction is considered to
contain an affective state and cognitive state (Burns and Neisner, 2006, Ding et al.,
2010).The cognitive state requires deliberate processing of information, whilst the
affective state is thought to be outside the conscious control of the customer. It could
be that customers are not as aware of their environmental stimuli because they do not
spend as much time in the environment as employees. Thus, having employee
quality, (cognitive stage) as an antecedent to customer satisfaction (affective stage)
provides a better understanding of the relationship between environmental stimuli
and customer satisfaction within a retail setting. Ding et al. (2010) had highlighted
that the role of affect within the customer satisfaction needed further exploration.
This finding suggests that customer satisfaction is perhaps more affective in nature,
which differentiates it from employee quality.
6.9 Control Variables
As highlighted earlier, due to the nature of this research in using dyadic data,
customer responses were aggregated to the employee level. In using dyadic data, the
customer demographic data, such as gender or age could not be used as a control
variable. This type of demographic information was not appropriate to aggregate to
employee level. For this research, the employee and manager data provided the
information for measuring the control variables. The control variables examined
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were, employee age, employee gender, full or part time employment, employee
length of stay with the store, day of the week, location of the store, size of store and
date of the refurbishment. It was found that employee age, employee gender,
employee length of stay with the store, day of the week and location of the store had
no significant effect on the final model. However, of particular significance was the
the influence of the size of the store on customer environmental stimuli. The t –value
was significant at 4.84. In examining the final model, size of the store was controlled
for.
6.10 Final model
The model was re-run with the insignificant relationships removed and with the
control variable of size of store. As design quality had no effect on customer
satisfaction, H5a, it was deemed appropriate to remove the environmental stimuli-
design quality link, H9a, because it did not have an effect on customer responses. As
customer responses are a core area of this research and environmental stimuli had no
direct influence on customers through H5a, H9a was removed from the finalised
model.
As would be expected having removed the insignificant links, an improved fit of NFI
.90, CFI .97, SRMR.15, p-value .00008 and RMSEA .047 was found for the
finalised model. The ratio of X² 840.59 over df 691 is .82. See figure 6.8. Overall
this indicated a very good fit for the model. although SRMR was above the .08
acceptable mark (Schreiber et al., 2006), it is important not to rely on one statistic to
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make conclusions about a models acceptability (Parish et al., 2008, Schumacker and
Lomax, 2004).
Parish et al. (2008) examined the item loading for their SEM results and CFA results
and found them to be similar, thus suggesting the item loadings passed the reliability
and discriminant validity criteria. A comparison of SEM item loadings and CFA
item loadings was carried out and they were found to be similar, as per table 6.28.
Furthermore in the revised model all the standardised path coefficients were
significant at the .05 level or lower, as per figure 6.8. Based on examining the item
loadings and significance of the path coefficients as suggested by Parish et al. (2008)
as ways of assessing the global and structural fit, the model was considered to be
acceptable. Similarly to the first model, an error covariance was permitted between
CLA and CLB, and t-value was 5.32.
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Label CFA SEM
Standardised Standardised
Loading Loading
FDE .95 .95
FO .80 .80
FM .72 .72
FL .85 .85
FLAY .84 .84
FEDE .91 .90
FEO .85 .86
FEM .59 .60
FELI .82 .82
FELAY .79 .80
CS3 .87 .86
CS4 .93 .93
CS5 .89 .88
CS6 .83 .84
QE1 .90 .90
QE2 .91 .90
QE4 .88 .88
QE5 .77 .78
QE6 .87 .87
CL2 .81 .82
CL3 .85 .82
CL4 .78 .80
CL5 .88 .89
CL6 .86 .87
CL7 .97 .97
CL8 .95 .95
CL9 .76 .76
ES1 .85 .85
ES3 .90 .90
ES4 .81 .82
ES5 .71 .71
ES6 .80 .81
ES7 .90 .89
EL1 .84 .81
EL2 .78 .77
EL3 .90 .93
EL4 .57 .58
EL5 .85 .82
Table 6.28 Comparison of CFA and SEM Standardised Loadings
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(S) (O) (R)
.76 (7.19) Employee

Loyalty
Employee  Managers
.61 (*5.79)  Till Operators
Environmental
Stimuli
-.25 (2.75)
Customer
. Customer
Environmental .60 (5.96) Employee
Loyalty
Stimuli Quality
Attitudinal
.30 (2.62)
.56 (5.66)
Customer
Customer .37 (3.53) Loyalty
Satisfaction Behavioural
Figure 6.8 Final Model
Control variable: Size of Store
*= all at p <.05
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6.11 Conclusion
The analysis presented in this chapter has highlighted several key contributions that
can be made to the literature. Firstly that the customer environmental stimuli
construct is a second order factor containing five sub factors of music, design,
lighting, olfaction and layout. Similarly the employee environmental stimuli
construct is a second order factor containing five sub factors of E-music, E-design,
E-lighting, E-olfaction and E-layout.
Secondly, that environmental stimuli have a direct effect on employee satisfaction
and indirectly effect employee loyalty. This demonstrates the need for further
research on the influence of environmental stimuli on employees in the literature, an
area that has been largely ignored in the service marketing literature (Skandrani et al.
2011). Considering that a main premise of the Service Dominant Logic literature
relates to employees in the service setting (Vargo, 2011), this finding is of great
significance.
Thirdly, using SEM in analysing dyadic data has provided a contradiction to a key
link in the SPC, that employee satisfaction positively influences customer
satisfaction. Through collecting dyadic data and carefully avoiding systematic bias,
the dyadic data provided insight that previous research may not have been able to.
The next and final chapter provides a detailed understanding of the implications of
the final model and the theoretical contributions it has made.
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7 CHAPTER 7 Conclusion
…Two roads diverged in a yellow wood, and I,
I took the one less travelled by,
And that has made all the difference.
Robert Frost (1875)
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7.1 Introduction
This closing chapter indentfies the the key contributions made to the work climate
literature, servicescape literature and the Service Profit Chain (SPC). The limitations
of the research are outlined and future research direction is suggested. Finally, the
chapter outlines the implications for managers in a grocery retail setting.
7.2 The Research Aim
The aim of this research was to investigate the impact of environmental stimuli on
the emotional responses of both customers and employees and the implications that
this has on their behavioural responses and its effect on financial performance. In
order to address the aim of this research, three objectives were proposed. This
allowed a theoretical model to be designed and rigorously tested. Building on
previous theoretical frameworks and addressing the gaps that were found in the
literature, as per chapter five, an integrated model was tested. The key frameworks
that gave insight to this research were the Stimulus Organism Response (SOR)
model, the SPC and the servicescape model. The main gaps that have been found in
the extensive literature review are summarised next.
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Firstly, there is a considerable lack of research on the impact of environmental
stimuli on employees in a service setting. Identifying the facet specific climate of
environmental stimuli impacting employees was fundamental to this research.
Kuenzi and Schminke (2009) noted that global climates are vast and examine broad
based determinants of employee behaviour, whilst facet specific climates have a
focus and are a climate for something (Schneider, 1975). The climate for something
being examined here is the environmental stimuli impacting employees or as
identified for this research, employee environmental stimuli. Within the work
climate literature there is a paucity of research in this area. Furthermore, in
examining the servicescape literature there is also a considerable lack of research on
employees. Research objective three addresses this gap by assessing the link between
environmental stimuli and customer and employee responses.
The second research gap relates to Bitner’s (1992) servicescape model. Though
Bitner (1992) highlighted that environmental stimuli impacted both customers and
employees, throughout the literature customers have been the main focus for
research on services. Furthermore, though Bitner (1992) again highlighted the
complexities of the environmental stimuli the main focus of extant research has been
on the environmental stimuli in isolation or in pairs rather than examining a global
configuration as was proposed by Bitner (1992). Additionally, environmental stimuli
have been incorporated into a service quality factor (Cronin Jr and Taylor, 1992,
Pollack, 2009), causing difficulties in identifying a distinction between
environmental stimuli and service quality. Research objectives two and three
examine this gap in the literature. In particular research objective two, evaluating the
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relationship between environmental stimuli and service quality, addresses the issue
of whether service quality and environmental stimuli are separate factors.
The third research gap is, that despite the acceptance within the literature of many of
the links within the SPC there is a paucity of research examining all the links in a
single study (Brown and Lam, 2008). The SPC provides an integrated framework for
examining key components of perceptions and behaviours with a service setting.
Comprehensive approaches to examining the SPC have been lacking due to the
difficulty in assessing all key components. Furthermore the SPC does not take the
global configuration of the environmental stimuli into consideration. Research
objective one, to examine the links within the SPC, and research objective three
addresses this third research gap.
7.3 Key Theoretical Contributions
Having identified the three research gaps and three research objectives, the key
contributions to the four literature chapters are examined. Working backwards
through the literature chapters provides a more fluid theoretical underpinning for
understanding the significant contributions that are made. Firstly, contributions to
employee environmental stimuli are identified, this relates to research objective
three. Secondly, contributions to customer environmental stimuli are highlighted,
this relates to research objective two and three. Contributions to the SPC are
examined last, this relates to research objective one and also ties in both customer
and employee environmental stimuli to the SPC.
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7.3.1 Employee Environmental Stimuli Contributions
As noted in chapter four, literature relating to environmental stimuli affecting
employees is very limited (Parish et al., 2008, Skandrani et al., 2011). This research
examines the entire servicescape model as suggested by Bitner (1992) in the service
marketing literature and incorporates elements as suggested by Davis (1984) in the
work climate literature. This provides insight into facet specific climate of the
employee environmental stimuli from the perspectives of both literatures. Within the
work climate literature there is very little empirical evidence relating to any
environmental stimuli affecting employees. More importantly there seems to be a
lack of previous research examining the global configuration as suggested by Bitner
(1992) affecting employee behaviour in a service setting.
This research introduced and provided a reliable construct for measuring
environmental stimuli into the work climate literature, thus providing substantial
insights into a body of literature that is predominantly lacking in its understanding of
environmental stimuli.
Due to the limited research on the employee environmental stimuli, items for the
questionnaire were adapted from the servicescape literature in service marketing.
Bitner (1992) had proposed that the three environmental dimensions impacted
employees as well. Theoretically it made sense to use items that had been
researched in customer settings as employees work in the same setting. The same
items were used for both customers and employees.
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This research used Confirmatory Factor Analyses (CFA) and Structural Equation
Modelling (SEM). Initially a one factor model with all the employee environmental
stimuli items was run and as expected it provided a poor fit. Through the use of CFA
five factors were identified for examining the employee environmental stimuli
construct. In this case it was found that environmental stimuli construct was
explained by the five sub-factors of E-design, E-music, E-lighting, E-olfaction and
E-layout. Each of the factors were found to be reliable and valid. This provides a
clear framework for further research and highlights the complexities of an employee
environmental stimuli climate in a service setting, which research has previously
ignored. This adds significantly to the literature and reduces the gap not only within
the work climate literature but also in the servicescape literature.
It is worth emphasising that due to the absence of research examining employee
environmental stimuli, its effects on employee behaviour has also not been
researched.. This research clearly finds a significant positive direct link between
environmental stimuli and employee satisfaction. This alone should provide
practitioners and managers with considerable thought as to how they design their
stores.
The study of direct or indirect effects relating environmental stimuli to employee
behaviour are limited in the service marketing literature (Parish et al. 2008, Kearney
et al., 2013). This research is one of the few to examine a global configuration of
environmental stimuli, based on Bitner’s (1992) and Davis (1984) research, and how
this configuration affects employee behaviour. Furthermore, examining the effects of
the environmental stimuli on employee satisfaction within a service setting is a first.
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Although Skandrani et al. (2011) carry out research on the effects of store
atmospherics on employee’s behaviour; their research is exploratory in nature and
does not directly examine the relationship between environmental stimuli and
employee satisfaction.
7.3.2 Customer Environmental Stimuli Contributions
As was highlighted in chapter three, considerable research on the elements of the
servicescape relating to customers has been empirically carried out (Ezeh and Harris,
2007, Kearney et al., 2007, Vilnai-Yavetz and Gilboa, 2010, Morrison et al., 2011,
Andersson et al., 2012, Orth et al., 2012, Hooper et al., 2013, Kearney et al., 2013).
This extensive literature provided significant insights into customer’s cognitive,
emotional and physiological responses resulting in a behavioural response. However
research relating to the global configuration affecting customer responses is
surprisingly lacking considering the large volume of research studies carried out.
Wakefield and Blodgett (1996) and Kim and Moon (2009) both examined five
elements relating to environmental stimuli: layout, facility aesthetics, seating,
electronic display and cleanliness, however these are not the proposed dimensions of
the servicescape as suggested by Bitner (1992). However, they did not examine all
dimensions as proposed by Bitner (1992) but incorporated more social elements
relating to credibility and competence of staff. Furthermore they examined the
factors as separate to each other and not as higher order factors relating to an overall
construct as this research proposed. This research clearly acknowledges that the
customer environmental stimuli construct is multidimensional.
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One of the few who have examined a more global configuration of the servicescape
is Ryu and Jang (2007). They examined facility aesthetics (décor, colour, and
furnishings), lighting, ambience (music, aroma, and temperature), layout and dining
equipment. However they did not examine a second order model but examined the
direct relationship of each factor with pleasure and arousal. As can be seen there is
considerable empirical evidence to support the view that different elements form part
of the environmental stimuli.
The first major contribution of this research is that examining the global
configuration of a store environment can provide a fuller framework to exploring
behavioural responses. This research provides evidence that environmental stimuli
should not be examined as a single general factor consisting of several items relating
to colour, lighting, music, layout or design but rather that environmental stimuli is a
multidimensional construct and consists of several sub-factors. This in itself
highlights the complexity of environmental stimuli and shows that measuring it as a
one factor model is insufficient. CFA was carried out and confirmed five separate
factors; music, design, layout, olfaction and lighting. These were very similar to the
employee environmental stimuli factors. Each of these was found to be valid and
reliable. A second order factor was derived which clarifies that music, design, layout,
olfaction and lighting were higher order factors relating to a construct that was
termed customer environmental stimuli. This second order model provides a more
comprehensive measurement model than had previously been accounted for in the
literature. Hightower (2010) postulated that the servicescape should be viewed as a
hierarchical factor structure, and this research provides evidence for this.
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Bitner (1992) identified three main dimensions: ambiance, space and function, and
signs, symbols & artefacts. This research extends this framework and suggests that
the ambience dimension is more complex. Five sub-factors were reported for the
environmental stimuli, rather than three as suggested by Bitner (1992). However
there is a clear acknowledgement of the theoretical underpinning of each of Bitner’s
dimensions. Bitner’s space and function is complimentary to the layout factor, signs
symbols & artefacts relates to the design factor. However music, lighting and
olfaction are clearly separate factors rather than being part of a general ambience
factor as many researchers have posited in the past. Considering the lack of research
on lighting (Summers 2001), a particular insight from this research is that lighting
was found to be a separate factor. As highlighted in the literature there has been a
crossover between design and layout. This research found them to be clearly separate
factors. Furthermore design and colour were related and found to form a single
factor, strongly suggesting that when perceiving the environmental stimuli customers
find colour to be part of the design factor. Also cleanliness has had limited research
(Vilnai-Yavetz and Gilboa, 2010) and has sometimes been associated with interior
design. Cleanliness was found to relate to olfaction. This again is not surprising as
unpleasing odours in a grocery retail store environment could suggest uncleanliness
of the environment.
7.3.3 SPC Contributions
Chapter one focusses on the well-known SPC model. One of the core objectives of
this research relates to exploring the links in the SPC. Some of the links in the SPC
as proposed by Heskett et al. (1994) were found to be significant. The most
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significant was the employee satisfaction to employee loyalty link. Before testing the
links in the SPC, CFA was used to assess the reliability and validity of the factors.
Similarly to past research the factors of, employee satisfaction, employee loyalty and
customer satisfaction were all found to be reliable and valid. This research also
found the factors of, customer loyalty and service quality to be reliable and valid.
However, in contrast to the extant SPC literature, this research found that customer
loyalty was multidimensional and consisted of customer loyalty attitudinal (CLA)
and customer loyalty behavioural (CLB) and that service quality also consisted of
two distinct but associated factors, employee quality and design quality.
7.3.3.1 Customer Loyalty
Theoretically it has been suggested that loyalty consists of two separate but related
factors of attitudinal and behavioural loyalty. However the majority of research has
only examined one or the other at any one time, or has not specified what type of
loyalty they were researching (Harris and Ezeh, 2008, Han and Ryu, 2009, Yee et al.,
2011). This research expands on previous research that only focussed on one loyalty
factor by examining both loyalty factors. The findings attempt to fill a gap in the
literature by demonstrating that customer loyalty consist of two separate factors,
customer loyalty altitudinal (CLA) and customer loyalty behavioural (CLB).
Previous research had not examined both loyalty intentions (Dick and Basu, 1994,
Zeithaml et al., 1996, Harris and Ezeh, 2008, Chen et al., 2009, Han and Ryu, 2009).
This research contributes to this debate by examining both CLA and CLB.
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One of the findings of this research is that previous items measuring behavioural
loyalty formed the CLB factor and previous items measuring attitudinal loyalty
formed the CLA factor. However, one behavioural item that had been used in the
past, CL4, visiting the store again even if others are cheaper, was found to be part of
the CLA factor. Perhaps this is not that surprising considering that previous research
has not examined both forms of loyalty.
In their research, Harris and Ezeh (2008) did not specify the type of loyalty they
examined but rather termed their factor customer loyalty. They had based their
research on Zeithaml et al. (1996) five item behavioural loyalty factor and had added
one extra item to the factor. Interestingly for this research the extra item added,
which was CL4, loaded on the CLA factor. Also Harris and Ezeh (2008) extra item
had the lowest loading for their customer loyalty factor. This highlights the need for
further research to firstly, specify what type of loyalty is being researched, and
secondly and perhaps more critically to examine both CLA and CLB.
Back (2005) and Han and Ryu (2009) have both suggested that examining the
behavioural factor of customer loyalty can be misleading. A decision to buy may not
be intentional but rather through lack of choice. However examining the attitudinal
loyalty can provide evidence of an emotional commitment to the provider. As this
research examines both, it provides much sought after evidence of a customer’s
emotional commitment to a store as well as their behavioural intention.
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7.3.3.2 Service Quality
As with customer loyalty, service quality is considered to be multidimensional.
However researchers often only examine a general service quality factor and do not
specify which factors of service quality they are examining (Baker et al., 1994, Yee
et al., 2011). In the past the factors relating to service quality have been unclear due
to elements of the environmental stimuli being included within the service quality
dimension (Cronin Jr and Taylor, 1992, Brady and Cronin Jr, 2001, Pollack, 2009).
This research finds environmental stimuli to be separate from service quality and
identifies employee quality and design quality as distinct factors. This provides a
clearer understanding of the service quality factors in the services literature.
Having identified, validated and found each factor to be reliable, the links in the
proposed model were examined using SEM. This research identifies some key
empirical evidence to guide further research direction. One of the objectives of this
research was to relate environmental stimuli to employee and customer response,
thus linking environmental stimuli with the SPC. Significant relationships were
found for both customers and employees with environmental stimuli thus confirming
the proposed relationship with the SPC.
7.3.3.3 Customer Environmental Stimuli-Customer Satisfaction
It would appear that though the customer environmental stimuli construct does not
impact on customer satisfaction directly it does impact positively on customer’s
perception of employee quality. It would seem customers evaluate employee quality
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in relation to their surroundings whilst shopping in the store. Customers observe and
experience employee quality in the store environment and then cognitively make
inferences about the quality of the service they receive. However, the store
environment, where customers make these evaluations of the service quality they
receive, has had limited consideration in the past. This research finds that the
influence of the global configuration of the environmental stimuli impacting service
quality which in turn impacts customer satisfaction is highly significant. Finding an
indirect link between environmental stimuli and customer satisfaction appears to be
consistent with previous research (Wakefield and Blodgett, 1996, Wakefield and
Blodgett, 1994, Han and Ryu, 2009, Morrison et al., 2011)
7.3.3.4 Customer Environmental Stimuli- Service Quality
Past research proposed that elements of environmental stimuli form part of the
service quality construct (Brady and Cronin Jr, 2001, Pollack, 2009). This research
indentifies that customer environmental stimuli are an antecedent to service quality,
thus indicating that environmental stimuli directly impact on service quality. This
confirms recent research by Hooper et al. (2013). This research reveals that
environmental stimuli are of great importance in determining customers’ perceptions
of the service quality they receive. Customer environmental stimuli are found to
positively affect employee quality and design quality. This derives from the fact that,
in the model, environmental stimuli accounted for a significant proportion of the
variance in both employee quality and design quality.
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From a theoretical perspective, this research is one of the few that examines how
environmental stimuli influence customer perceptions of both employee quality and
design quality. The extant literature to date has offered little insight into the
relationships between the global configuration of the environmental stimuli, as
suggested by Bitner (1992), and service quality. Notably, Baker et al. (1994) and
Reimer and Kuehn (2005) highlighted the need for research. This study then has
contributed to the ‘void in the literature’ as noted by Baker et al. (1994, p. 335). The
findings of this research provide empirical support not only for environmental
stimuli being considered to be separate from service quality, but furthermore tests
this against a multidimensional perspective of service quality.
7.3.3.5 Service Quality-Customer Satisfaction
It should be highlighted that, though a significant relationship was found between
employee quality and customer satisfaction, no significant relationship was found
between design quality and customer satisfaction. This would appear to reiterate the
idea that customers place more emphasis on the quality of the employee and that the
quality of the design of the store does not have a direct impact but rather there is an
indirect relationship between customer environmental stimuli and customer
satisfaction.
Design quality not having a direct impact on the customer is not that surprising in a
grocery retail store context. Customers are surrounded by environmental stimuli but
are more conscious of the employee quality. However their perceptions of employee
quality takes place within the service environment where the environmental stimuli
350
are present. Thus their perceptions of the environmental stimuli are an affective
process, suggesting a subconscious process, thus indirectly affecting their perception
of the employee quality they receive, as was found in this research. Oliver (1993)
highlighted that the evaluative process of cognitive and affective can be considered
to produce separate levels of influence on satisfaction. This research found direct and
indirect influences on customer satisfaction, indicating that cognitively customers
were directly aware of employee quality but affectively they were indirectly aware of
the environmental stimuli. The findings ascertain that the driver of customer
satisfaction was clearly employee quality.
7.3.3.6 Customer satisfaction –Customer Attitudinal Loyalty (CLA)/Customer
Behavioural Loyalty (CLB)
Customer satisfaction factor was found to be consistent with previous research
(Hightower et al., 2002, Dietz et al., 2004, Chi and Gursoy, 2009). A positive link
between customer satisfaction and CLA and CLB was found. An important
implication of the findings is the differentiation of CLA and CLB. Clearly customer
loyalty should be examined on both behavioural and attitudinal elements. This
research makes an important contribution because it demonstrates empirically the
effect of customer satisfaction on both CLA and CLB, rather than extant research
which examines the effects of customer satisfaction on general customer loyalty.
The relationship between customer satisfaction and CLB was slightly stronger than
for customer satisfaction and CLA. Though the link for behavioural loyalty was
slightly higher, this research highlighted that customers can be emotionally
351
committed to a store. This research has filled a large void in the literature by finding
significant evidence for both CLA and CLB in a grocery retail setting.
The relationships most often researched in the services literature are the influences of
service environment on customers and in turn customers behavioural responses. Of
particular insight for this research was that the employee relationships were more
significant in the service setting than the customers relationships.
7.3.3.7 Employee Environmental Stimuli - Employee Satisfaction - Employee
Loyalty
Strong support for the proposition that employee environmental stimuli positively
influence employee behaviour in a service setting was found. Specifically, evidence
that the global configuration of environmental stimuli significantly affects employee
satisfaction resulting in employee loyalty is a key empirical finding. Both employee
satisfaction (Homburg and Stock, 2004, Wangenheim et al., 2007, Chi and Gursoy,
2009, Homburg et al., 2009) and employee loyalty (Currivan, 1999, Gelade and
Young, 2005, Paulin et al., 2006) factors were consistent with previous research.
Finding a significant positive relationship for environmental stimuli affecting
employee behaviour provides much needed empirical evidence that helps close a gap
in the literature.
A fundamental significant finding was that employee environmental stimuli had a
significantly larger positive direct relationship on employee satisfaction than it did
on customer satisfaction. This is very important as it identifies that the impact of
352
environmental stimuli on employee behaviour is stronger than for customer
behaviour. This derives from the fact that a higher variance was accounted for by the
environmental stimuli in explaining employee satisfaction and loyalty than for
customer satisfaction and loyalty. The direct link between employee environmental
stimuli and employee satisfaction was a highly significant link at a 1% level of
confidence and contributed to 37% of the variance explained in employee
satisfaction.
Furthermore, this is a revolutionary finding as the results of this research corroborate
the presence of relationships that previously have been over looked in the literature.
Hsu and Wang (2008) had highlighted how crucial it was to understand what factors
influence employee satisfaction. These findings clearly demonstrate the direct impact
that environmental stimuli have on employee satisfaction. This also highlights that
employees are more aware of their work environment than customers are of their
shopping environment, even though it is the same environment being examined.
Additionally, employee satisfaction directly impacted employee loyalty, and
employee satisfaction was directly affected by employee environmentally stimuli.
This also highlights the significant indirect relationship that environmental stimuli
can have on employee loyalty. Maertz et al (2007) indicated that in the future
understanding employee loyalty is a primary concern for managers. In providing
insight into the literature, these findings have highlighted the influence of
environmental stimuli on employee loyalty. This clearly validates the importance of
designing service environments not only for customer behaviours but for employee
behaviours. Facet specific research relating to employee environmental stimuli
353
impacting on behaviour has been lacking in the work climate literature. The findings
of this thesis provide key insights for future researchers to consider.
7.3.3.8 Employee Satisfaction -Customer Satisfaction
Of particularly interest in this research is the employee-customer satisfaction link.
Through the use of the dyadic data customer responses were aggregated to employee
responses. This gave significant insight into the employee-customer satisfaction link
as both sides of the dyad were responding. The dyad contained corresponding
information from customers and till operators, thus enriching previous research in
the service literature as well as in the work climate literature.. This adds to the
emerging dyadic data collection methodology in this area.
It was identified that employees had indicated that they were satisfied or strongly
satisfied. Customers also indicated that they were satisfied or strongly satisfied.
However contrary to previous research, where employee satisfaction has positively
influenced customer satisfaction (Loveman, 1998, Wangenheim et al., 2007, Brown
and Lam, 2008, Jeon and Choi, 2012) or where no relationship was found (Homburg
et al., 2009, Kantabutra, 2011), this research found a significant negative
relationship. This is somewhat surprising as it has been generally accepted
theoretically that employee satisfaction will lead to customer satisfaction, in the so
called satisfaction mirror. Of particular interest is that Homburg et al., (2009) and
Kantabutra (2011) both used dyadic data but found no relationship.
354
Results suggest that testing only a direct employee-customer satisfaction link could
be limited as it is important to account for other constructs impacting directly and
indirectly on customer satisfaction. For example, clearly service quality has a
stronger relationship with customer satisfaction than employee satisfaction and is
significant at the 1% level. Furthermore the global configuration of the customer
environmental stimuli has a significant positive affect on service quality and an
indirect effect on customer satisfaction.
7.4 Limitations of the Research
This research focused on one industry, grocery retail, in Ireland. Thus the service
accounts for only one type of service, a utilitarian service. Furthermore this research
is a representation of one geographic area within Ireland.
In relation to the financial measure, data was collected during a global downturn.
Furthermore managers had stated that they did not want to share financial data. In
order to gain financial information a likert scale was developed. Managers may have
been reluctant to answer this particular question due to its sensitive nature, which
may have affected the financial performance links within the model.
In examining employee loyalty, the direct costs of training staff were not examined.
It has been highlighted that recruiting new staff costs more for training (DiPietro and
Milman, 2004). Not examining this element could also have impacted on the
financial performance links in the SPC. Furthermore Anderson and Mittal (2000)
suggested that customer loyalty has been linked to lower marketing costs. Marketing
355
costs were not examined in this research and a fuller explanation of financial costs
and marketing costs should be examined to understand the relationship between
loyalty and overall costs of an organisation rather than just the performance costs of
the store.
Significant shortcomings of this research resulted from problems in examining the
PAD. CFA could not confirm the factors for the PAD. This may have occurred due
to the type of service that was being examined or due to lack of customer response
on this particular question. Customers visit grocery stores to fulfil a need rather than
to have a hedonic experience. Customers may also not be aware of their emotional
response within a utilitarian service. Furthermore there may have been some self-
censorship by customers since they may feel that a grocery retail service setting is
not an appropriate venue to exhibit emotions.
Past research has found PAD to be problematic. However this research in keeping
with past research used semantic differential scaling for measuring the PAD as was
suggested by Mehrabian and Russell (1974). It was found for this research that
customers were confused on how to answer the semantic differential questions. More
recently Kim and Moon (2009) used Likert scales based on the Pleasure dimension
and found a three item factor to be reliable. Further research should perhaps look at
measuring the PAD with Likert scales rather than semantic differential scaling.
356
7.5 Future Research Directions
There are clearly many avenues for further research that could help guide managerial
and academic understanding. Promising avenues for further research can be derived
at the employee level. The most obvious extension for further research would relate
to employee environmental stimuli. Prior research has focussed in on the notion that
the environmental stimuli or servicescape provides a critical understanding of
customer evaluations and behaviours. However, research examining employee
evaluations and behaviours has been predominantly unfounded due to environmental
stimuli impacting employees being largely ignored in the literature. There is an
extensive gap in the literature relating to employee environmental stimuli that needs
careful and considerable consideration. Skandrani et al. (2011, p. 62) point out that
‘the atmospherics dimensions in the employee case deserve to be studied more
thoroughly’.
Another avenue for further research, as was highlighted by Brady and Cronin (2001,
p. 45) is to ‘investigate the interrelationships between service quality and other
service constructs’. In particular the relationship between service quality and
environmental stimuli needs to be empirically examined in a closer manner.
Additional research investigating whether environmental stimuli are an antecedent of
service quality would add further to the literature. Furthermore, research examining
the different factors relating to service quality needs further investigation as well as
how each of the different factors impact emotional and behavioural responses.
357
It is worth noting that Wakefield and Blodgett (1996) carried out research in a leisure
service setting, which was highly hedonic in nature and where customers spend more
time. They found that different environmental stimuli impacted on service quality
than those proposed in this research. Kim and Moon (2009) who based their research
on Wakefield and Blodgett (1996) also examined a more hedonic service
environment, a restaurant setting. This research examined a utilitarian based service.
Differences between hedonic and utilitarian services relating to environmental
stimuli and service quality need further exploration.
Customer loyalty has widely been researched in the literature; however customer
loyalty relating to behavioural loyalty is the most widely researched. Some research
has explored attitudinal loyalty but this is limited. Research examining both CLA
and CLB in a single study is needed to further highlight the significant differences
that exist between the two factors.
It is worth underlining that the cleanliness factor is worthy of further exploration.
Though cleanliness was proposed as a separate factor for both employees and
customers, it was not found to be separate but part of the olfaction factor. However
two of the proposed items for the cleanliness factor were negatively worded and
negatively worded items were generally not found to be reliable in this research.
More recently Miles et al. (2012) used a six item cleanliness factor that did not
contain negatively worded items. They found this to be reliable and valid as a factor.
However it should be used with caution as they did not examine all elements of the
service but focused their research on facility aesthetics, cleanliness and layout.
358
Further research should incorporate a more comprehensive factor for examining
cleanliness.
In relation to the main principle of the SPC, the robustness of the employee-
customer satisfaction link has been challenged in this research and in other research
(Silvestro and Cross, 2000, Homburg et al., 2009, Kantabutra, 2011). More studies
using dyadic data could help in examining this controversial link. Furthermore it
would be beneficial to include a measure of market performance and not just
financial performance in the SPC.
What should be taken into consideration when examining the SPC is that it is likely
that the core relationships, between employee and customers, are dependent on the
nature of the service being explored. For example in the retail grocery store, more
self-service tills are being used in stores. Another example is more petral stations are
using card only self-service points where there is no need to speak with anyone. This
reduces the need for direct employee-customer interaction within these particular
service settings. However these are both utilitarian focussed services. Further
highlighting the need to examine the differing influences the SPC has in both
hedonic and utilitarian services.
Another avenue for further research is the role of dominance in an online
environment. One of the key differences with online environments is that customers
have more control of their environment and the information they seek (Alba et al.,
1997). Furthermore there is a need for clarification regarding the global
configuration of online environmental stimuli, as many authors disagree on the
configuration (Chen et al., 2002, Hopkins etal, 2009, Harris and Goode, 2010)
359
7.6 Managerial Implications
The key management implication is that store managers should consider different
agents when designing their store environment. Not only customers should be taken
into consideration but employees. The impact of environmental stimuli or as referred
to in the industry as ‘store atmospherics’, has an influential effect on employee
satisfaction. Efforts to increase employee satisfaction should not proceed without
taking into account the atmospherics that can affect them. Atmospherics relates to
the colour, lighting, music, layout, overall design and olfaction (Kotler, 1973).
Designing new stores should start with observing staff members as they work and
what design features enable or inhibit them or what is missing that could help them
carry out their job better. A key part of an employee’s role in a service environment
is providing a service to customers; the way services are designed should be
functionally pleasing for employees in order to provide a quality service.
Atmospherics have been found to affect peoples’ attitudes and behavioural intentions
and are an important part of employee’s lives when they are at work (Skandrani et
al., 2011). Management overlook the fact that employees spend much more time in
the service environment then their customers. Because they spend longer in the
environment, atmospherics have a greater influence over their satisfaction than it
does for customers. Customer satisfaction is always a key component when
designing service environments; however atmospherics may not directly impact
customer satisfaction. What was found in this research is that customers are more
aware of the service quality they receive. The proposed model can assist managers in
360
understanding how their customers assess the quality of the store and how in turn
quality affects customer satisfaction. Customers perceived that the atmosphere
impacted on design quality and employee quality. They believed these to be separate
elements.
Of particular importance for managers is that the quality of the design did not
directly affect customer satisfaction, but rather the quality of the interaction with the
employee had a direct effect on customer satisfaction. The service takes place within
the store, where customers may interact with employees. Atmospherics impact on
the perception of employee quality that customers receive. Customers make
judgements of the quality they receive about employees within the store
environment. Thus atmospherics indirectly affects customer satisfaction.
Furthermore, if stores are designed with employees in mind as well as customers,
employees may be able to provide a better quality of service.
This research further suggests that store managers should not neglect the importance
of keeping employees satisfied as this leads to employee loyalty. As Hsu and Wang
(2008) pointed out it is of utmost importance for organisations to identify and
understand the factors that influence employee loyalty. In the past employee loyalty
has been conceptualised to relate to the costs for organisations when employees
leave. Reducing staff turnover is crucial to an organisation as it can reduce the costs
of training and recruiting staff (Hsu and Wang, 2008). If managers are aware of what
influences employee loyalty then they can reduce the costs of training new staff.
Furthermore training new staff involves time, time that could be spent with
customers (Gentry et al., 2006).
361
Likewise, managers should acknowledge that customer satisfaction leads to their
behavioural loyalty as well as their attitudinal loyalty. This is of particular
importance as managers believe that satisfied customers will return to the store and
shop. However this research also shows that customers may be attitudinally loyal
and have an emotional commitment to the store. This suggests customers will visit
the store even if others are cheaper and they will choose the store over other stores
that have similar products. This is of particular importance because customers may
return to the store because of convenience or lack of choice, thus showing
behavioural loyalty, but if customers are attitudinally loyal they are choosing to
return because they are satisfied with the service they are receiving. It is vital for
managers to examine both types of loyalty. If there are no competitors in the area,
customers may return due to lack of choice (Nguyen et al., 2012). If managers can
provide a service that keeps customers loyal attitudinally, than if a competitor does
open up nearby than customers may not shop in the competing store. If managers are
aware of the type of loyalty their customers have than they are able to make
informed decisions.
Managers using the SPC framework should be cautions in its interpretation. Not all
the links in the SPC are suitable for every service setting. Mangers need to be aware
if their service is hedonic or utilitarian in nature as this impacts on the links in the
SPC. This research examined retail grocery stores which are utilitarian in nature. A
key relationship in the SPC is the positive influence of employee satisfaction on
customer satisfaction. This link was found to be negative, suggesting that employee
satisfaction does not lead to customer satisfaction. However these results should be
362
used with caution. There may be a level at which employee satisfaction does not lead
to customer satisfaction but rather keeps customers from becoming dissatisfied.
Further research is needed on this link in order for managers to make informed
decisions.
363
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Appendix 1
Table of authors using Mehraiban and Russell (1974) framework
396
Author Sample size Origin of Study Design Dimensions and Variables Purpose and Findings Comments
Russell (1980) Test 1) 36 Canada Self report Pleasure Purpose: To show that affective states are best represented in a two Useful in understanding the
Test 2) 34 Arousal dimensional space. M&R model
Test 3) 343 Findings: There findings agreed with Mehrabian and Russell (1974)
subject model. That the two dimensions can be called Pleasure and Arousal.
Both genders
Donavan and 30 graduate USA Descriptive Pleasure Purpose: to test if approach-avoidance behaviour can be predicted from Within the literature it was
Rossiter (1982) business Arousal PAD emotional states inside a store environment and information rate. an influential study, even
students chosen Dominance Findings: In pleasant environments, enjoyment, shopping time, and though it was a very small
Information Rate spending increases as arousal increases. Dominance does not seem to sample Revised M&R model
Approach-avoidance strongly influence behaviour Agreed with the M&R
intentions Model. Ignored Dominance
Milliman 36 Actual USA Field experiment Music tempo Purpose: to test the effect of music, music tempo on traffic pace, Not beneficial in terms of
(1982) supermarket Sales volume volume, awareness in supermarket. the M&R model
shoppers Traffic pace Findings: Music tempo related to traffic pace and sales volume but not
to awareness
Amato and 12 settings Australia Field experiment Pleasantness Purpose: To examine Mehrabian and Russell (1974) Hypothesis Similar to Donavan &
McInnes 220 subject Arousal Findings: Their findings supported the model. Environmental Rossiter(1982) research
(1983) aged 16+ City environments pleasantness was positively associated with affiliative behaviour, Revised M&R model
Information rate arousal and information-rate were curvilinearly related to affiliative Agrees with the M&R
behaviour, and a significant interaction was observed between Model
environmental pleasantness and arousal, with arousal being positively
associated with affiliative behaviour in pleasant environments& a
negative association in unpleasant environments.
397
Bellizzi, 125 females USA Laboratory Colours Purpose: Colours and its association with approach behaviour. Focuses on Colour
Crowley and Ages 18-64 experiment Approach behaviour Findings: colours do not influence approach behaviours but are Not beneficial in terms of
Hasty (1983) Physical attraction associated with physical attraction. People are drawn to warm colours the M&R model Females
but they found them unpleasant. were chosen because it was
felt women do most retail
shopping
Milliman 1392 customer USA Field Research Background music Purpose To examine the effect of background music on the behaviour of Use of the M&R model
(1986) groups (observation) Approach-avoidence restaurant customers
644 observed Findings: That music tempo variations can significantly affect
customer purchases, length of stay, and other variables.
groups
Yalch and 86 (male?) USA 3x2x2 Music Purpose: To explore the relationship between types of music provided in Used Donavan and Rossiter
Spangenberg shoppers experimental Approach avoidance a retail store and in-store behaviour study as a basis.M&R model
(1988) design behaviour Findings: Using background music as the environmental music relative used
Field Experiment to foreground music or no music resulted in shoppers reporting that they
were less aroused. Shoppers perceived background music as less
desirable then foreground music
Yalch and 86 (male?) USA 3x2x2 Music Purpose: To compare the effects of background and foreground music Uses the M&R scale in
Spangenberg department store Experimental age Findings: when shoppers were exposed to music that they normally the research Is a further
(1990) shoppers design listen to they reported spending less time in the store than they had research from there 1988
Field experiment indented relative to when they listened to music they do not usually research
select.
Hui and 115 British UK Laboratory Consumer density Purpose: To investigate perceived control and its effects on the service Not beneficial in terms of
Bateson (1991) Adults Experiment Perceived Control experience the M&R model
A 3x2x2 Perceived Crowding Findings: That perceived control can be used to explain the effects of
Factorial design Approach-avoidance consumer choice on the emotional and behavioural outcomes within the
Pleasure service environment.
398
Baker, Levy, 147 USA Experimental Arousal Purpose: To examine the Mehrabian and Russell (1974) model Similar to Donavan &
and Grawel undergraduate Factorial Pleasure Findings: Affective states produced by the environment do influence Rossiter(1982) research
(1992) students Design Ambient levels consumers’ willingness to buy. That social factors influenced arousal Revised M&R model
Social levels and that social-ambience interaction occurred for pleasure and Agrees with the M&R
willingness to buy. Model
Ignored Dominance
Bellizzi and 70 Adult USA Experimental 2 X Colour Purpose: to conduct two simultaneous experiments to test the effects of Similarly to Bellizzi et al
Hite (1992) women 2 Factorial design Approach-avoidance colour (red versus Blue) to induce feelings and purchase intentions. (1983), focuses on Colour
107 behaviours Findings: consumers react more favourably to a blue environment. blue Not beneficial in terms of
undergraduate Purchase rates environment resulted in higher stimulated purchase rates. Colour effects the M&R model but does
students were more strongly linked to pleasure than they are arousal and look at light on colours
dominance. effects
Kelleris and 150 upper level USA Experimental Music Purpose: To explore the influence of music on listeners’ perceptions of Music focus
Kent (1992) business Manipulation of duration Not beneficial in terms of
students the music Findings: that music can influence Consumers subjective experience of the M&R model
time.
Yalch and ??shoppers USA Field experiment Music Purpose: to examine the effects of store music on shopper behaviour in a Looked at Donovan and
Spangenberg Shopping-behaviour department store. Rossiter (1982) study
(1993) Findings: that playing the appropriate music for a specific department
enhanced the environment resulting in more shoppers making purchases
and spending more money
Donovan, 60 18-35-year Australia Field study Pleasure Purpose: To examine Mehrabian and Russell (1974) hypothesis More in depth study to D&
Rossiter, old females Arousal Findings: Higher arousal reduced unplanned spending in unpleasant R (1982) Revised M&R
Marcoolyn, Time environments, but was not significant in pleasant environments. Model. Finds support for
and Nesdale Unplanned purchases Pleasure is significantly associated with extra time and unplanned M&R model. No reasoning
(1994) spending in pleasant environments but not in unpleasant. for only using female
shoppers
399
Gulus and Supermarket USA Field Study Music Purpose: To examine the effects of generational background music on Use of the M&R scale
Schewe (1994) Respondents Approach avoidance shoppers.
39 (30-49) Behaviour Findings: Classic rock background music had a positive effect on the
37 (65 +) number of items purchased by baby boomers in a field environment.
Wakefield and Junior and USA Laboratory Perceived quality Purpose: to examine the servicescape quality satisfaction repatronage Is useful in examining the
Blodgett Senior students experiment Perceived satisfaction relationship Servicescape. Used Video-
(1994) (did not indicate Video Repatronage Findings: they found that different atmospheres do tend to affect taping. Not useful for the
number) perceptions of quality, satisfaction and future purchase intentions MR Model
Dube, Chebat 270 Canada Laboratory Pleasure Purpose: To examine Mehrabian and Russell (1974) hypothesis Beneficial in terms of the
and Morin undergraduate experiment Arousal Findings: Music does influence buyer-seller interactions. Found main M&R model
(1995) French- A 3x3 Desire to Affiliate effect and interactive effects of music-induced pleasure and arousal on Revised M&R model
Canadian Factorial design Music consumer’s desire to affiliate with bank personnel. Disagree with the 2nd and
students 3rd hypothesis
Herrington and 140 shoppers USA Field experiment Music Purpose: to report the findings of a controlled field study examining the Use Milliman’s (1982)
Capella (1996) Approach-Avoidance effects of music on shopping behaviour Research M&R model used
behaviour Findings: that tempo and volume of the background music did not Russell and Snodgrass
influence the shopping time or expenditures of shoppers (1991) model
Spangenberg, 308 USA Laboratory Scent affect Purpose: To examine the effects of olfaction on behaviour Not Beneficial in terms of
Crowley, and undergraduate experiments Evluations of the Store Findings: The presence or absence of a scent affects both evaluations the M&R model
Henderson students Store environment and in-store behaviour. Subjects in a scented environment perceived
(1996) Merchandise that they spent less time in the store than they actually did.
Specific products.
Intentions to visit the store
Wakefield and Football USA Field research Servicescape Purpose to build on Bitner’s 1992 servicescape model Is useful in examining the
Blodgett Baseball Satisfaction Findings: the servicescapes are an important determinate of customers Servicescape.
(1996) Casino behavioural intentions when the service is consumed for hedonic
(Did not purposes and when the consumer spends a lengthy time in the service
indicate setting .
number)
Kenhove and 364 retail Belgium Field research Pleasure Purpose: to examine the Mehrabian and Russell (1974) model. Beneficial in terms of
Desrumaux shoppers Arousal Findings: identifies that the organism-response part of the Mehrabian the M&R model
(1997) Furniture stores, Approach-avoidance and Russell model is useful in a retail environment. However the results Revised M&R model
400
garden stores do not support the ‘bi-directionality’ between pleasure and arousal. An Agree and disagrees with
and clothing attempt to dampen arousal in an unpleasant environment will lead to M&R findings
stores more avoidance behaviours. Even in a neutral or pleasant setting very
high arousal does not lead to more avoidance behaviours
Spies, Hesse 76 customers Germany Field research Lighting Purpose: to investigate the effects of store stimuli on customers’ mood, Not Beneficial in terms of
and Loesch per store Colour satisfaction and purchasing behaviour. the M&R model
(1997) Two stores Layout Findings: It could be shown that customers satisfaction was higher in
Mood the pleasant compared to the less pleasant stores. Goal attainment as
Information rate well as customers mood state was an important variable
Tai and Fung 300 shopping Hong Kong Field research Pleasure Purpose: To investigate the Mehrabian and Russell (1974) model in Beneficial in terms of
(1997) respondents Arousal terms of a retail context. the M&R model. Revised
CD stores Information load Findings: Reinforce that Mehrabian and Russell model is useful in the M&R model. Agree and
Approach-avoidance study of store behaviour. However it was found that information rate disagrees with M&R
behaviour has strong affects on arousal only. The findings partly coincide with findings. Though they do not
Donovan and Rossiter (1982) findings that the effect of information rate say in the study, they
on emotional states is not significant. support Lazarus 1991 theory
Foxall and 142 consumers England Field research Pleasure Purpose: to examine how pleasure, arousal, and dominance would each The first research to
Greenley Arousal influence approach, avoidance, and aminusa (represents Mehrabian and illustrate the importance
(1999) Dominance Russell (1974) composite measure of approach-avoidance) of Dominance
Approach-avoidance Findings: shows that Pleasure, Arousal and Dominance explain Revised M&R model
consumers’ verbal expressions of approach-avoidance over the range of Beneficial in terms of
BPM-generated service environments investigated. Compared with past the M&R model
research Dominance was found to be significant.
401
Machleit and 1st wave 401 USA Field experiment Emotions Purpose: To address the increasing sample of heterogeneity in Izard and Plutchik have
Erogula (2000) undergraduate PAD evaluating emotional responses to retail environments More information than
students Findings: That the Izard and Plutchik measures outperform the M&R model
2nd wave 343 Mehrabian and Russell (1974) measure, they contain more information. Disagrees with the M&R
undergraduate model
students
3rd wave 153 adult
Respondents
Wirtz, Mattila 240 undergraduate Singapore Laboratory Target arousal levels Purpose: to investigate the impact of target affected states within Beneficial in terms of
and Tan (2000) students experiment Pleasure Russell (1980) framework. They propose that when a consumer desires the M&R model
A 2x2x2 factorial Approach-avoidance to be in a relaxing or low arousal environment that increasing arousal Revised M&R model
design levels will reduce the effects of pleasure on satisfaction Agrees and disagrees with
Findings: Support Mehrabian and Russell (1974) model that under high the M&R model
target arousal, that is, in pleasant (unpleasant) conditions the higher the Introduces the concept of
arousal level, the more positive (negative) the satisfaction evaluation. Target-arousal
However, in the low target arousal condition, subjects failed to exhibit
higher levels of satisfaction in pleasant yet high arousing environments
Yalch and 71 marketing USA Experimental 2x2 Time Purpose: To investigate the effects of music in a retail environment on Not Beneficial in terms of
Spangenberg students factorial design Music real and perceived shopping times the M&R model
(2000) Arousal Findings: That shopping time is affected by music. The effects of
Pleasure familiar and unfamiliar music were very different.
Dominance
Chebat, Chebat 593 undergraduate Canada Laboratory Music Purpose: to understand the effects of music on customers’ reactions. Not Beneficial in terms of
and Vaillant business students Experiment Music ‘fit’ Findings: Music may attract attention onto itself, what is important to the M&R model
(2001) A 4x2x2 factorial Information load note is the music ‘fit’ Music fit is as important a research area as music
design pleasure and music arousal. Concept of ‘music fit’
402
Dubé and 110 shoppers Canada Field study Servicescape Purpose: to test the effects of background music of different pleasure Disagrees with the M&R
Morin (2001) Music intensity. Model
Findings: that attitude towards servicescape, influenced by pleasure
intensity, in turn, affected store evaluation. However the effect does not Revised M&R model
occur through automatic transfer of affect proposed by Mehrabian and
Russell (1974)
Mattilla and 270 customers USA Factorial design in Arousal Purpose: Hypothesised that matching arousing dimensions of scent and Beneficial in terms of
Wirtz (2001) a field setting Pleasure music will lead to enhanced pleasure, approach, impulse buying. the M&R model
Music Findings: when ambient scent &music are congruent with each other in
Scent terms of their arousing qualities consumers rate the environment Revised M&R model
significantly, more positively, have higher levels of approach and have
impulse shopping behaviour and experience enhanced satisfaction then
if the variables are at odds with each other.
Summers and 2367 two stores USA A 2x2 Lighting Purpose: to investigate the influence of display lighting on consumer Beneficial in terms of
Herbert (2001) (video cameras) Factorial Approach-avoidance approach-avoidance behaviour. the M&R model
experimental Findings: indicate that lighting levels do contribute to consumer Revised M&R model
design approach behaviour. Results support Mehrabian and Russell (1974) Agrees with the M&R
model that increased levels of lighting will produce arousal and Model
pleasure and increase the approach behaviours of consumers.
Hightower, 125 game goers USA Field research Servicescape Purpose: To investigate the relationship between the physical Beneficial in terms of
Brady and Behavioural intentions environment on consumer behavioural intentions. research on the
Baker (2002) Findings: that the servicescape does have a significant influence on Servicescape
consumer behavioural intentions; however this impact is mediated by a
number of constraints. Also the relationship between the servicescape Not beneficial in terms
and these marketing constraints is complex of the M&R model
Sweeney and 128 female Australia 2X2 experimental Music Purpose: to examine the effects of music on consumer responses. Extends the M&R model
Wyber (2002) students design Approach avoidance Findings indicated that liking of music has a major effect on consumers Female student because
evaluations, while the music characteristics have an additional effect on female fashion shop
pleasure and service quality.
Chebat and 145 shopping Canada Two factor Pleasure Purpose: to test the effects of ambient scents in a shopping mall Found that Lazarus (1991)
Michon (2003) mall subjects experiment (actual Arousal environment with the use of the Mehrabian and Russell (1974) Model. Model was more beneficial
retail location) Approach-avoidance Findings: Ambient scent contributes to the building of a favourable then M&R
403
behaviour. perception of the mall environment, and indirectly of product quality.
Odour Some of their findings agree with Lazurus (1991) theory which
contradicts the approach-avoidance model.
Gilboa and 130 undergraduate Israel? Laboratory PAD dimensions Purpose: to examine the store environment on emotions and behaviour Beneficail in terms of the
Rafaeli (2003) students experiment Approach-Avoidance tendencies. M&R model
Findings: the study confirmed the mediating role of the basic Agrees and disagrees with
dimensions predicted by M &R (1974). The M&R model
Babin, 209 females from USA Experimental Colour Purpose: To investigate the effects of Colour and lighting together on Consistent with the M&R
Hardesty and a university factorial design Lighting consumers reactions. Findings: Consistent with previous research Model
Suter (2003) community 2x2x2 between- consumers reacted more favourably to cool store interiors. Also Revised M&R model
subject design consumers reported the lowest evaluation, excitement, price fairness,
patronage and purchase intentions in the orange and bright condition.
Reimer and 580 bank sample Switzer-land Field research Servicescape Purpose: to explore the effect of the servicescape on perceived quality. Beneficial in terms of
Kuehn (2004) 565 restaurant Findings: The servicescape has a direct and indirect effect on perceived research on the
sample service quality. Also the servicescape is of greater importance in Servicescape
determining customers’ evaluations in a hedonic service compared to a
utilitarian service.
Bigne, Andreu 200 Spain Field experiment Pleasure Purpose: to test the Mehrabian and Russell (1974) model and Lazarus’ Found Lazarus theory to
and Gnoth Spanish/Mediterra Arousal cognitive theory. be more beneficial then
(2005) nean Theme park Satisfaction Findings: Positive arousal influences visitor’s pleasure positively. It was M&R model
consumers aged Approach/avoidance found that pleasure was linked to consumer satisfaction.
18+ behaviour
404
Spangenberg, 130 undergraduate USA Laboratory Odour Purpose to explore the joint effects of ambient scent and music on Beneficial for seasonal
Grohmann and students aged 20- Experiment Music customers evaluations of a store Information (Christmas)
Sprott (2005) 55 A 2x2 full PAD Dimensions Findings: That consistency between an ambient scent and music in retail
factorial design settings leads to more favourable evaluation of the store. Also Uses M&R PAD
Behavioural intentions to visit are also positively affected. Dimensions
Mattilla and 178 part time USA Laboratory Arousal Purpose: to test a theoretical framework that explains arousal Found that Target arousal
Wirtz (2006) MBA and Experiment Service evaluations congruency effects on consumer perceptions of intrinsically pleasant is important.
undergraduate A 3x3factorial environments .Findings: they indicate that an intrinsically attractive Revised M&R model
students design store environment can be perceived as unpleasant if it fails to match the
consumers desired level of stimulation (arousal congruency). Note the
term target-arousal
Spangenberg, 181 shoppers USA Field Experiment Odour Purpose: to explore the evaluative and behavioural effects of congruity S-O-R model used
Sprott, 82 men Approach-avoidance between ambient scent and store’s gender based products.
Grohmann and 99 female Findings: shoppers evaluate store more favourably, have more approach
Tracy (2006) behaviours when the scent is congruent with the gender based products
then when it is incongruent.
Chebat and 587 adult shoppers Canada Field experiment Colour Purpose: To explore the effects of warm and cool colours on shoppers Use of the M&R scale
Morin (2007) Shoppers perceptions perceptions Manipulation of colour
Pleasure and Arousal Findings: Results indicated that colour schemes can have significant in a mall
effects on shopper’s perceptions of the environment. However mall (cognitive cueing effects as
décor did not affect shoppers self reported pleasure and arousal levels opposed to consumer
response through mood)
Newman 100 respondents at UK Field experiment PAD Purpose: To explore and test taxonomy development. Revised the M&R model
(2007) airport terminals Approach-avoidance Findings: That consumer’s responses towards a service setting can be
Servicescape expressed in terms of PAD. Also desire to stay or go can be expressed
in terms of approach and avoidance.
405
Appendix 2
Email sent to managers
406
To Mr. X,
My name is Treasa Kearney and I was speaking with [Mr./Mrs. X] regarding

research. [X] gave me your details and indicated that you might be interested in
taking part in store research.
I am a PhD researcher at DIT and I am conducting research in store atmospherics,

customer satisfaction and employee loyalty. My research would involve
administrating questionnaires in store to both employee and customers over one
day.
I have attached a short two page document outlining my research and how it could be
of benefit to you. The current pilot draft of the customer questionnaire and employee
questionnaire are also attached. This will be shorted in the next couple of weeks
when the pilot study has been completed. This questionnaire can also be customized
to meet your needs.
I know this time of year is a exceptionally busy period for you and I hope that you
will be able to spare a few minutes to have a look the questionnaires. I really
appreciate you taking time to help me with my research and I feel that it could be of
huge benefit to you. I would hope to collect the data in March.
I hope to be in contact soon, if you have any questions please do not hesitate to call
me on
085 6144896 .
Kind Regards
Treasa Kearney
407
Short Description of Research
The purpose of this research is to understand how customers react to the retail
environment and ultimately how these reactions to issues such as colour, music,
lighting, layout and odour contribute to their impressions of service quality and their
loyalty to the store. A core aspect of this research is to understand the interplay
between the working environment and the loyalty of employees as they experience
the environment for much longer periods than the customers do. The major outcome
of this research is a model that links the environment experienced by the customers,
and employees, to financial outcomes.
Research Objectives
The objectives are
 To explore how employee satisfaction and customer satisfaction relates to
 To discover the impact of a pleasurable store atmosphere on the financial
performance.
 To find out how the store atmosphere affects the customer’s satisfaction
 To find out how the stores atmosphere affects employee’s satisfaction
Currently, many retail grocery stores have less money to spend and it is important to
find key areas to spend what limited finances you have. A stores environment
impacts two key groups, customers and employees. By examining the stores
environment vital information can be gained and informed decisions can be made on
where best to put the limited funding.
The Proposed data collection

The proposal is to distribute questionnaires, to the store manager/assistant manager,
to three or more till operators and to 80-100 customers. I would be administering the
questionnaires in store over one day. For the purpose of the research, data from
employee and customers would need to be collected on the same day. The employee
questionnaire takes 7- 10 minutes and the customer questionnaire takes 8-12 minutes.
408
In order to adequately model financial outcomes, some data of that nature is needed
from the customer and also some data on the macro-environmental issues facing the
store will be collected. These can be adapted to meet other requirements that you
would like me to look at.
Benefits for your Store
A significant piece of research which can be customised to your own needs carried
out by trained researchers. An in-depth look at how customers perceive the retail
environment in the store is an important benchmark for future store development and
I feel that this would be something of interest for you to know more about.
 Employees
It is important for managers to be aware of how the physical store environment
impacts the employee. The employee plays a key role in grocery stores as they
interact with the customer. Their satisfaction can have an impact on customer
satisfaction. Furthermore satisfied employees will stay in their jobs for longer. This
reduces training costs and in the long run can reduce a series of costs for the
company. The research is looking at how the environment in which they work can
affect their satisfaction in the work place.
 Customers
An important element to this research is that you are gaining customers perspectives
on what they think of the stores atmosphere. Customers are key to the financial
success of the company and their input could help improve your profits. This
research hopes to gain an understanding of how the stores atmosphere can impact
customer’s satisfaction and how this can then lead to customer loyalty. Having an
enjoyable environment to shop in has been shown to encourage customer loyalty. In
the long term this can lead to lower financial costs and higher spends.
409
Appendix 3
Thank you letter
410
<Address>
19th of May 2011
To Mr X,
Thank you for taking the time to help me with my research. I really appreciate the
time and effort that you have contributed to this research. The employees who took
part in the research were very helpful and it was a pleasure to work with them for the
day. They gave me great insight and were very cooperative. A big thank you as well
to your customers that helped me out on the day, without all those that took part I
would not be on my way to completing my PhD.
Kind Regards
__________________________
Treasa Kearney
PhD Researcher
DIT
Aungier Street
Dublin 2
411
Appendix 4a
Interview Guide for Managers
412
Background
Q Could you tell me a little about your background?
Maybe how you came about this job?
How long have you been working in this role/similar roles?
Refurbishment
When was the last time the store was refurbished or updated?
Do you think the refurbishment of the store was beneficial for the customer or maybe
the employee? Or do you think a refurbishment of the store would be beneficial for
the customer or maybe the employee
Have you seen a change in how employees approach their work since the
refurbishment?
Have customers given you any feedback of what they think of the refurbishment?
Music
Do you feel the stores music plays an important role in creating a good store
atmosphere? Why?
Do you feel that the music played in store can help in creating a pleasurable store
atmosphere? How?
Are there any aspects, for example the music being too laud that make it more
difficult to satisfy the employee or the customers?
Colour & Lighting
Do you feel that the colour of the walls and the facilities are suitable for the store?
How do you think it adds to the stores atmosphere?
Do you think the stores colour creates a cheerful atmosphere? How
Do you feel the stores colour impact a customer’s satisfaction? How? What about the
employees?
And do you think the lighting in the store is suitable for creating a good store
atmosphere? Why?
Layout
Do you think the layout of the aisles are beneficial to the stores atmosphere?
413
And do you feel that the store layout has an impact on employee’s satisfaction?
How?
In relation to the customer do you think the layout can encourage shopping? How
Do you think the layout of the store, for example the distance between the aisles or
the way they are laid out can create a more pleasant store atmosphere for the
customer?
Do you feel that having clear signs in the store can help in keeping a customer
satisfied?
Aroma
How important do you feel the presence of a pleasant aroma in the store is?
Do you think that the stores aroma creates a cheerful atmosphere to shop or work in?
Are there any aromas that you feel can communicate a pleasurable atmosphere for
the customer? For example, the stores aroma of freshly baked goods? How does it
help create a pleasing atmosphere?
General Store Atmosphere
What are the aspects of the store atmosphere that you think facilitate the employee’s
satisfaction?
Do you feel they same aspects are important to the customer’s satisfaction? Or are
there other aspects of the stores atmosphere more important for their satisfaction?
Is there any particular aspect of the store atmosphere that you think is more
important? Why?
Is there any aspect, for example the lighting of the store, or the stores window design
that you are able to change?
Could you give me an example of how you changed different aspects to create a
better store atmosphere?
For example if the store gets too cold or too hot for the employees and the customers,
are you able to make changes to suit them?
And do you feel you can change other aspects of the stores atmosphere? Such as the
volume of the music or the tempo of it?
How important is it to have control over these aspects do you think?
414
Do you think it is important to know if your employees are happy in their jobs?
Why?
How do you check if your employees are satisfied with their job?
How do employees who are happy in their jobs differ from those that are not happy
in their jobs?
Employee Loyalty
Could you tell me how important is it to the store to keep employees in their jobs?
Do you think keeping the same employees is beneficial to the company?why?
Do you feel that training an employee can encourage them to stay?
Do you train them to interact with customers? Why?
How important do you think it is for the customer to have employees that they know
in store?
Could you tell me the importance of keeping the customer satisfied? Could you give
me an example of how the customer is kept happy within the store?
How do you deal with customer complaints?
Customer Loyalty
Do you feel customers desire to return to the same store?
Do you think it is important for the same customer to return and repeat purchase?
Why?
How do you think customers desire to return to the same store can be maintained by
the store?
Further comments....
Is there anything else you would like to add that you think might be relevant to the
area?
To whom it concerns
415
Appendix 4b
Interview guide for Customers
416
General
Where would you go to buy a few items that you might need?
Would it be the same place as where you would do your large shop?
Layout
Do you think that the layout of the store makes it easy to find what you are looking
for?
Do you think that the layout of the aisles encourages you to look around the store
more?
How does the signage help to find what you are looking for in the store?
Music
Do you think the music in the store is suitable for creating a good store atmosphere?
And do you feel the music creates a cheerful store atmosphere?
Or does the stores music make you feel happy to be in the store?
Colour
What do you think of the stores colour scheme?
Do you think the stores colour scheme is attractive/ pleasurable to shop in?
Lighting
How does the lighting in the store influence your shopping experience?
And do you think that the lighting can create a pleasurable atmosphere to shop in?
How
Or do you think the lighting in the store puts you in a good mood? How?
Aroma
What do you think of the smell of freshly baked bread in the store?
General Store Atmosphere
What do you think is the most important aspect of the stores atmosphere? or is it a
combination of different aspects?
Do you feel you can control any aspect of your shopping experience to create it more
enjoyable? For example asking an employee to change the music or scanning your
own products at the till?
Do you find the employees in store to be approachable?
Whilst shopping in [name the shop] do you find that employee to be helpful in the
way they serve you? How?
Were you satisfied with your shopping experience in the store? Why
Customer loyalty
Would you recommend others to shop here?
Would you come back here to shop again? Why
Do you think returning to the same store makes the shopping easier? Why
Further comments
Is there anything else that you would like to add that you feel would be relevant to
the area?
417
Appendix 5a
Customer Questionnaire (word format)
418
Date _____________
Please indicate your gender Date ___________
Male Female Timeofofday
Time day _____________
___________
Store
Storelocation
Location ___________
_____________
What age group do you belong to?
18-25 26-35 36-45 46-55 56-65 66+
Please indicate your occupation
Student Working Unemployed Stay at home parent
How much did you spend in store today?
€0- €15 €15-€30 €30-€45 €45-€60 €60- €90 € 90 +
How long did you spend in the store?
Less than 10min 10- 20min 20 -30 min 30 -40 min 40 min +
What was the shopping intention of your visit? (Please tick just one)
Pick up some To do a small To do the large To pick up Other_______________

forgotten items grocery shop weekly food shop some lunch
How many times would you visit this store on a weekly basis? _____________
What would be your average spend per visit?
€0- €15 €15-€30 €30-€45 €45-€60 €60- €90 € 90 +
Do you have a loyalty/value card for this store? Yes/No
If Yes, did you use the loyalty card on this occasion? Yes/No
How often would you use the loyalty card when you visit this store?
Every time Most of the time Occasionally Rarely Never
SECTION 2
Q1 How satisfied were you with the service you received from the employee at the checkout in terms of...
Strongly Strongly
Satisfied Dissatisfied
Providing fast service to me. 1 2 3 4 5 6 7
Being courteous and friendly 1 2 3 4 5 6 7
Providing an accurate service for me 1 2 3 4 5 6 7
Willingness to help me 1 2 3 4 5 6 7
Making me feel secure about my transactions. 1 2 3 4 5 6 7
Showing sincere interest in me 1 2 3 4 5 6 7
Resolving problems quickly for me 1 2 3 4 5 6 7
Q2. In comparison to other stores within a 5 km radius...

Strongly Strongly
Agree Disagree
This stores pricing is competitive 1 2 3 4 5 6 7
419
Q3. Please circle your level of agreement with each of these statements (Please circle only one number per line)
Strongly Strongly
Agree Disagree
The materials used inside the store are pleasing & of high quality 1 2 3 4 5 6 7
The store is cluttered 1 2 3 4 5 6 7
The store layout never fails to impress me 1 2 3 4 5 6 7
The music played in the store is pleasant 1 2 3 4 5 6 7
The overall lighting level in the store is appropriate 1 2 3 4 5 6 7
The store has a pleasant smell. 1 2 3 4 5 6 7
In this store, the aisles between the shelves are wide 1 2 3 4 5 6 7
enough to pass through easily.
The signs in the store provide adequate direction 1 2 3 4 5 6 7
The aroma in this store is pleasant. 1 2 3 4 5 6 7
The store has clean aisles and exits. 1 2 3 4 5 6 7
This store is decorated in an attractive fashion. 1 2 3 4 5 6 7
The colours used create a pleasant atmosphere 1 2 3 4 5 6 7
The lighting creates a comfortable atmosphere 1 2 3 4 5 6 7
The interior décor of this store is attractive. 1 2 3 4 5 6 7
It is easy to walk around this store and find what you 1 2 3 4 5 6 7
are looking for.
The colour scheme in the store is attractive. 1 2 3 4 5 6 7
The lighting is excellent at the store. 1 2 3 4 5 6 7
The stores layout allows me to move around easily 1 2 3 4 5 6 7
The music in the store is played at an appropriate volume. 1 2 3 4 5 6 7
The store understands that the design of its facility 1 2 3 4 5 6 7
is important to me.
The aroma in the store is fitting. 1 2 3 4 5 6 7
The store maintains clean food service areas 1 2 3 4 5 6 7
The use of colour in the decor scheme adds excitement 1 2 3 4 5 6 7
to this store environment
The music played in the store is appropriate. 1 2 3 4 5 6 7
The interior design is visually appealing 1 2 3 4 5 6 7
The store is not kept clean 1 2 3 4 5 6 7
Q4. Please circle your level of agreement with each of these statements
Strongly Strongly
Agree Disagree
I am a loyal customer of this store 1 2 3 4 5 6 7
This store is the first choice for me among the same types 1 2 3 4 5 6 7
of store
If there are two stores close to each other and both of them 1 2 3 4 5 6 7
have similar products and prices, I will choose to shop here
I will visit this store even if others are cheaper 1 2 3 4 5 6 7
Say positive things about the store to other people 1 2 3 4 5 6 7
Recommend the store to someone who seeks your advice 1 2 3 4 5 6 7
Encourage friends to do business with the store 1 2 3 4 5 6 7
Encourage relatives to do business with the store 1 2 3 4 5 6 7
Do more business with the store in the next few months 1 2 3 4 5 6 7
420
Q5. As in the following example, please circle the number closest to the adjective that best describes your feelings with
regard to shopping in this store. For Example, I feel...shopping in this store
Good 1 2 3 4 5 6 7 Bad
Happy 1 2 3 4 5 6 7 Unhappy
Bored 1 2 3 4 5 6 7 Relaxed
Calm 1 2 3 4 5 6 7 Excited
Unstimulated 1 2 3 4 5 6 7 Stimulated
Restricted in the space 1 2 3 4 5 6 7 Free to act
Guided 1 2 3 4 5 6 7 Independent
Unsatisfied 1 2 3 4 5 6 7 Satisfied
Depressed 1 2 3 4 5 6 7 Content
Indifferent 1 2 3 4 5 6 7 Agitated
Sleepy 1 2 3 4 5 6 7 Wide awake
In Control 1 2 3 4 5 6 7 Cared for
Influential 1 2 3 4 5 6 7 Influenced
Hopeful 1 2 3 4 5 6 7 Frustrated
Pleased 1 2 3 4 5 6 7 Annoyed
Uncrowded 1 2 3 4 5 6 7 Crowded
Dull 1 2 3 4 5 6 7 Fidgety
Controlled by the space 1 2 3 4 5 6 7 In-control
Unimportant 1 2 3 4 5 6 7 Important
In comparison to other grocery stores..... Strongly Strongly
Agree Disagree
The arrangement of this stores interior layout is better 1 2 3 4 5 6 7
This store's aisles are more spacious 1 2 3 4 5 6 7
The design of this store's checkout facilities is better 1 2 3 4 5 6 7
The design of this store's front is better 1 2 3 4 5 6 7
Employees give me personal attention. 1 2 3 4 5 6 7
I am treated well by employee 1 2 3 4 5 6 7
Employees are willing to help me 1 2 3 4 5 6 7
The store offers high-quality service. 1 2 3 4 5 6 7
Employees are not too busy to respond to me. 1 2 3 4 5 6 7
I believe the store offers excellent service. 1 2 3 4 5 6 7
Thank You
Thank you for completing the questionnaire and your participation in this study is very much appreciated. If there are any
additional comments regarding your experience please include them in the space provided below.
____________________________________________________________________________________________________
____________________________________________________________________________________________________
____________________________________________________________________________
If you would like to be entered into the draw for €300 SUPERVALU vouchers, please enter your name and contact
information below
Name_________________________
Email/Phone___________________
421
Appendix 5b
Employee Questionnaire (word format)
422
SECTION 1 (BLOCK CAPITAL PLEASE) Date _____________
Time of day _____________
Please indicate your gender
Store Location _____________
Male Female
What age group do you belong too?
18-25 26-35 36-45 46-55 56-65 66+

How long have you been working here? _______________
Are you a full time or a part time employee in this store?
Full time Part Time
How many hours a week do you work? __________________
Employee Loyalty
Please circle only one number per line Strongly Strongly
Agree Disagree
Most of the time I am willing to put in extra effort so 1 2 3 4 5 6 7
that the store remains a leading store
I speak highly of the shop in which I work to my friends 1 2 3 4 5 6 7
I feel proud to work at this store 1 2 3 4 5 6 7
I would turn down a job with comparable pay and 1 2 3 4 5 6 7
career prospects to stay at this store
I care about the fate of the shop in which I work 1 2 3 4 5 6 7
Please circle your level of agreement with each of these statements
Strongly Strongly
Agree Disagree
Generally speaking, I am very satisfied with this job 1 2 3 4 5 6 7
I do not intend to work for a different company 1 2 3 4 5 6 7
I like my job 1 2 3 4 5 6 7
There are no fundamental things I dislike about my job. 1 2 3 4 5 6 7
I like my job more than many employees of other companies 1 2 3 4 5 6 7
I consider this employer as first choice 1 2 3 4 5 6 7
I am generally satisfied with the kind of work I do in this job 1 2 3 4 5 6 7
I frequently think of quitting this job 1 2 3 4 5 6 7
423
SECTION 2
As in the following example, please circle the number closest to the adjective that best describes your feelings with
regard to working in this store. For example I feel...... working in this store
Good 1 2 3 4 5 6 7 Bad
Guided through the store 1 2 3 4 5 6 7 Free to Choose
In Control 1 2 3 4 5 6 7 Stressed
Relaxed 1 2 3 4 5 6 7 Fidgety
Servicescape Elements
Please circle your level of agreement with each of these statements
Strongly Strongly
Agree Disagree
The materials used inside the store are pleasing& of high quality1 2 3 4 5 6 7
This service provider's layout never fails to impress me. 1 2 3 4 5 6 7
The music played in the store is pleasant. 1 2 3 4 5 6 7
The overall lighting level in this store environment is appropriate 1 2 3 4 5 6 7
The signs in this store environment provide adequate direction 1 2 3 4 5 6 7
The store has clean walkways and exits. 1 2 3 4 5 6 7
The lighting creates a comfortable working atmosphere 1 2 3 4 5 6 7
)The interior décor of this store is attractive. 1 2 3 4 5 6 7
are looking for.
This stores layout allows me to shop easily 1 2 3 4 5 6 7
424
is important to me.
This facility maintains clean food service areas 1 2 3 4 5 6 7
Strongly Strongly
Agree Disagree
Emotional exhaustion
I feel emotionally drained from my work 1 2 3 4 5 6 7
I feel used up at the end of the working day 1 2 3 4 5 6 7
I feel fatigued when I get up in the morning and 1 2 3 4 5 6 7
have to face another day at work
Working with people all day is really a strain for me 1 2 3 4 5 6 7
I feel burned out from my work 1 2 3 4 5 6 7
I feel I am working too hard on my job 1 2 3 4 5 6 7
Working with people directly puts too much stress on me 1 2 3 4 5 6 7
I feel like I am at the end of my tether 1 2 3 4 5 6 7
425
Appendix 5c
Manager Questionnaire (word Format)
426
SECTION 1 (BLOCK CAPITAL PLEASE) Date _____________
Time of day _____________
Managers Name__________________________
Store Location _____________
What size is the shop floor (sq/m)?_______________
What age group do you belong to?
18-25 26-35 36-45 46-55 56-65 66+
Are you a full-time or part-time manager? _____________
How many hours a week do you work?____________
How long have you been working in this industry?_____________
How long have you been working for Supervalu?____________
How long have you been the store manager in this store?___________
Did you work as a store manager before this store on behalf of Musgrave? Yes/ No
If Yes, How many years? _________
When was the store last refurbished?______________ When was the store opened?__________________
SECTION 2
Q1. Please circle only one number per line Strongly Strongly
Agree Disagree
Most of the time I am willing to put in extra effort so 1 2 3 4 5 6 7
that the store remains a leading store
I speak highly of the shop in which I work to my friends 1 2 3 4 5 6 7
I feel proud to work at this store 1 2 3 4 5 6 7
I would turn down a job with comparable pay and 1 2 3 4 5 6 7
I care about the fate of the shop in which I work 1 2 3 4 5 6 7
Q.2 Please circle your level of agreement with each of these statements
Strongly Strongly
Agree Disagree
Generally speaking, I am very satisfied with this job 1 2 3 4 5 6 7
I do not intend to work for a different company 1 2 3 4 5 6 7
I like my job 1 2 3 4 5 6 7
There are no fundamental things I dislike about my job. 1 2 3 4 5 6 7
I like my job more than many employees of other companies 1 2 3 4 5 6 7
I consider this employer as first choice 1 2 3 4 5 6 7
I am generally satisfied with the kind of work I do in this job 1 2 3 4 5 6 7
I frequently think of quitting this job 1 2 3 4 5 6 7
427
Q.3 In comparison to other stores within a 5 km radius...
Strongly Strongly
Agree Disagree
This stores pricing is competitive 1 2 3 4 5 6 7
Q.4 Please circle your level of agreement with each of these statements
Strongly Strongly
Agree Disagree
The materials used inside the store are pleasing & of high quality 1 2 3 4 5 6 7
The store layout never fails to impress me 1 2 3 4 5 6 7
The music played in the store is pleasant 1 2 3 4 5 6 7
The overall lighting level in the store is appropriate 1 2 3 4 5 6 7
The signs in the store provide adequate direction 1 2 3 4 5 6 7
The store has clean aisles and exits. 1 2 3 4 5 6 7
The lighting creates a comfortable working atmosphere 1 2 3 4 5 6 7
The interior décor of this store is attractive. 1 2 3 4 5 6 7
are looking for.
The stores layout allows me to move around easily 1 2 3 4 5 6 7
is important to me.
The store maintains clean food service areas 1 2 3 4 5 6 7
Strongly Strongly
Agree Disagree
I feel emotionally drained from my work 1 2 3 4 5 6 7
I feel ‘used up’ at the end of the working day 1 2 3 4 5 6 7
I feel fatigued when I get up in the morning and 1 2 3 4 5 6 7
have to face another day at work
Working with people all day is really a strain for me 1 2 3 4 5 6 7
I feel burned out from my work 1 2 3 4 5 6 7
I feel I am working too hard 1 2 3 4 5 6 7
Working with people directly puts too much stress on me 1 2 3 4 5 6 7
428
I feel like I am at the end of my tether 1 2 3 4 5 6 7
Q.5 As in the following example, please circle the number closest to the adjective that best describes your feelings
with regard to working in this store. For example I feel...... working in this store
Good 1 2 3 4 5 6 7 Bad
Guided 1 2 3 4 5 6 7 Independent
In Control 1 2 3 4 5 6 7 Cared for
Dull 1 2 3 4 5 6 7 Fidgety
SECTION 3_________________________________________________________________________________
What is the number of full time employees working in this store ? _______________
What is the number of part-time employees working in this store? ________________
Please circle your level of agreement,

The firms overall performance compared with major competitors, within a 5 km radius, in terms of ...is.
Far below Far above

Competitors Competitors
The sales growth 1 2 3 4 5 6 7
The market Share 1 2 3 4 5 6 7
The profit growth 1 2 3 4 5 6 7
The average scanning margin for the store 1 2 3 4 5 6 7
The average footfall of the store 1 2 3 4 5 6 7
429
Appendix 6
Tables of Factors
430
Tables of Factors
* T = Table
M DE L LAY O QD QE CS CLA CLB EM EDE ELI ELAY EO ES EL
Music (M)
Design (D) T* 1
Lighting (L) T2 T 17
Layout (LAY) T3 T 18 T 32
Olfaction (O) T4 T 19 T 33 T 46
Design Quality T 5 T 20 T 34 T 47 T 59
(QD)
Employee T6 T 21 T 35 T 48 T 60 T 71
Quality (QE)
Customer T7 T 22 T 36 T 49 T 61 T 72 T 82
Satisfaction (CS)
CLA T8 T 23 T 37 T 50 T 62 T 73 T 83 T 92
CLB T9 T 24 T 38 T 51 T 63 T 74 T 84 T 93 T 101
E-music (EM) T 10 T 25 T 39 T 52 T 64 T 75 T 85 T 94 T 102 T 109
E-design (ED) T 11 T 26 T 40 T 53 T 65 T 76 T 86 T 95 T 103 T 110 T 116
E-lighting (EL) T 12 T 27 T 41 T 54 T 66 T 77 T 87 T 96 T 104 T 111 T 117 T 122
E-layout (ELAY) T 13 T 28 T 42 T 55 T 67 T 78 T 88 T 97 T 105 T 112 T 118 T 123 T 127
E-olfaction (EO) T 14 T 29 T 43 T 56 T 68 T 79 T 89 T 98 T 106 T 113 T 119 T 124 T128 T 131
Employee T 15 T 30 T 44 T 57 T 69 T 80 T 90 T 99 T 107 T 114 T 120 T 125 T129 T 132 T134
Satisfaction (ES)
Employee T 16 T 31 T 45 T 58 T 70 T 81 T 91 T 100 T 108 T 115 T 121 T 126 T130 T 133 T135 T136
Loyalty (EL)
431
1.1 Table 1 Music (M) and Design (DE)
Loadings Variance
M1 The music played in the store is pleasant .57 .39 7.10 .46
M2 The music in the store is played at an appropriate volume. .68 .29 8.63 .61
M3 The music played in the store is appropriate. .78 .21 9.84 .74
DE2 This store is decorated in an attractive fashion .66 .22 9.46 .66
DE4 The store understands that the design of its facility is .72 .35 8.81 .60
important to me.
DE5 The interior design is visually appealing .77 .13 11.26 .82
C2 The colour scheme in the store is attractive .57 .19 9.13 .63
C3 The use of colour in the decor scheme adds excitement to .64 .25 9 .62
this store environment
Chi-Square 35.14, df 19, P-value 0.01342, RMSEA 0.094,SRMR.043,GFI .92, NFI .96, CFI .98
1.2 Table 2 M and Lighting (L)

Loadings Variance
L2 The lighting creates a comfortable atmosphere .83 .32 8.64 .68
Chi-Square 6.14, df 4, P-value 0.18922, RMSEA 0.075, SRMR.032, GFI .98, NFI .98, CFI .99
1.3 Table 3 M and Layout (LAY)

Loadings Variance
LAY2 In this store, the aisles between the shelves are wide .59 .65 5.89 .35
enough to pass through easily
LAY3 It is easy to walk around this store and find what you are .78 .40 8.19 .60
looking for
LAY5 The signs in the store provide adequate direction .83 .30 8.97 .70
Chi-Square 25.05, df 8, P-value 0.00152, RMSEA 0.149, SRMR.070, GFI .92, NFI .92, NNFI .89, CFI .94
1.4 Table 4 M and Olfaction (O)

Loadings Variance
M2 The music in the store is played at an appropriate .87 .24 9.96 .76
volume.
CLEAN3 The store maintains clean food service areas .70 .52 7.43 .48
Chi-Square 9.85, df 8, P-value 0.27593, RMSEA .049, SRMR.036, GFI .97, NFI .98, NNFI .99 , CFI .99
432
1.5 Table 5 M and Quality Design (QD)
Loadings Variance
M2 The music in the store is played at an appropriate volume .79 .37 8.33 .63
QE5 Employees are not too busy to respond to me .77 .25 8.87 .60
QE6 I believe the store offers excellent service. .87 .14 10.70 .76
1.6 Table 6 M and Quality Employee (QE)

Loadings Variance
QD1 The arrangement of this stores interior layout is better. .85 .28 9.93 .72
QD3 The design of this store's checkout facilities is better .75 .44 8.22 .56
QD4 The design of this store's front is better .75 .44 8.28 .56
Chi-Square 11.51, df 13, P-value 0.56839, RMSEA 0.000, SRMR.043, GFI .97, NFI .98, CFI 1.00
1.7 Table 7 M and Customer Satisfaction (CS)

Loadings Variance
CS3 Providing an accurate service for me .87 .25 10.53 .75
CS5 Making me feel secure about my transactions. .89 .21 10.85 .79
Chi-Square 24.41, df 13, P-value 0.02756 RMSEA 0.096, SRMR.044, GFI .93, NFI .94, CFI .97
1.8 Table 8 M and Customer Loyalty Attitudinal (CLA)

Loadings Variance
CL2 This store is the first choice for me among the same types of
.81 .35 8.84 .65
stores
CL3 If there are two stores close to each other and both of them .86 .26 9.60 .74
CL4 I will visit this store even if others are cheaper .77 .41 8.35 .59
433
1.9 Table 9 M and Customer Loyalty Behavioural (CLB)
Loadings Variance
CL5 Say positive things about the store to other people .88 .23 10.92 .77
CL6 Do more business with the store in the next few months .86 .25 10.61 .75
CL7 Encourage relatives to do business with the store .97 .05 13.09 .95
CL8 Encourage friends to do business with the store .95 .10 12.50 .90
CL9 Recommend the store to someone who seeks your advice .76 .43 8.70 .57
Chi-Square=25.24, df=18, P-value=0.11845, RMSEA 0.065, SRMR.058, GFI .94, NFI .97, CFI .99
1.10 Table 10 M and Employee Music (EM)

Loadings Variance
EM2 The music in the store is played at an appropriate volume. .62 .62 2.47 .38
EM3 The music played in the store is appropriate. .79 .37 2.55 .63
Chi-Square 2.85, df 4, P-value=0.58349, RMSEA 0.000, SRMR.032, GFI .99, NFI .98, CFI 1.00
1.11 Table 11 M and Employee Design (EDE)

Loadings Variance
M2 The music in the store is played at an appropriate volume..78 .38 8.17 .62
EDE1 The materials used inside the store are pleasing & of high.59 .65 6.12 .35
quality
EDE3 The interior décor of this store is attractive. .82 .33 9.52 .67
EDE4 The store understands that the design of its facility is .68 .54 7.28 .46
important to me.
EDE5 The interior design is visually appealing .73 .47 7.98 .53
EC1 The colours used create a pleasant atmosphere .84 .29 9.86 .71
EC2 The colour scheme in the store is attractive .85 .27 10.11 .73
Chi-Square 21.02, df 26, P-value 0.74074, RMSEA 0.000, SRMR.050, GFI .95, NFI .96, CFI 1
1.12 Table 12 M and Employee Lighting (ELI)*

Loadings Variance
ELI2 The lighting creates a comfortable working atmosphere .94 .12 9.64 .88
ELI3 The lighting is excellent at the store. .85 .28 8.67 .72
Chi-Square 9.44, df 11, P-value 0.58157, RMSEA 0.000, SRMR.047, GFI .97, NFI .96, , CFI 1, * ELI was
problematic and EM was run with the analysis
434
1.13 Table 13 M and Employee Layout (ELAY)
Loadings Variance
ELAY2 In this store, the aisles between the shelves are wide .63 .61 6.28 .39
ELAY3 It is easy to walk around this store and find what you are .77 .40 7.82 .60
looking for
ELAY5 The signs in the store provide adequate direction .90 .20 9.16 .80
Chi-Square 15.58, df 8, P-value=0.04885, RMSEA 0.099, SRMR .090, GFI .95, NFI .93, CFI .96
1.14 Table 14 M and Employee Olfaction (EO)

Loadings Variance
M2 The music in the store is played at an appropriate .78 .39 8.14 .61
volume.
ECLEAN3 The store maintains clean food service areas .63 .61 6.31 .39
1.15 Table 15 M and Employee Satisfaction (ES)

Loadings Variance
M1 The music played in the store is pleasant .73 (.47) .47 7.55 .53
M2 The music in the store is played at an appropriate volume .78 (.39) .39 8.14 .61
M3 The music played in the store is appropriate. .83 (.32) .32 8.68 .68
ES1 Generally Speaking, I am very satisfied with this job .85 (.27) .27 10.31 .73
ES3 I like my job .90 (.19) .19 11.26 .81
ES4 There are no fundamental things I dislike about my Job .81 (.34) .34 9.56 .66
ES5 I like my job more than many employees of other .71 (.49) .49 7.90 .51
companies
ES6 I consider this employee as first choice .80 (.36) .36 9.36 .64
ES7 I am generally satisfied with the kind of work I do in this .90 (.19) .19 11.26 .81
job
435
1.16 Table 16 M and Employee Loyalty (EL)
Loadings Variance
EL1* Most of the time I am willing to put in extra effort so that the .84 .29 9.73 .71
store remains a leading store.
EL2 I speak highly of the shop in which I work to my friends .78 .40 8.76 .60
EL4 I would turn down a job with comparable pay and career .57 .68 5.85 .32
prospects to stay at this store
EL5* I care about the fate of the shop in which I work .85 .28 9.87 .72
Chi-Square 20.26, df 18, P-value 0.31836, RMSEA 0.036, SRMR .058, GFI .94, NFI .97, CFI .99, * error
covariance for EL1 EL5, 1.79
1.17 Table 17 DE and L

Loadings Variance
C3 The use of colour in the decor scheme adds excitement to .77 .41 8.79 .59
important to me.
Chi-Square 18.25, df 13, P-value 0.14842, RMSEA 0.065, RMR.029, GFI .95, NFI .98, CFI .99
1.18 Table 18 DE and LAY

Loadings Variance
important to me.
LAY2 In this store, the aisles between the shelves are wide enough .60 .65 6.12 .35
to pass through easily
looking for
436
1.19 Table 19 DE and O
Loadings Variance
C3 The use of colour in the decor scheme adds excitement .78 .39 8.94 .61
important to me.
1.20 Table 20- DE and QD

Loadings Variance
important to me.
1.21 Table 21- DE and QE

Loadings Variance
important to me.

437
1.22 Table 22- DE and CS
Loadings Variance
important to me.
1.23 Table 23 DE and CLA

Loadings Variance
C2 The colour scheme in the store is attractive .79 (.37) .37 9.1 .63
C3 The use of colour in the decor scheme adds excitement to .78 (.39) .39 8.88 .61
DE2 This store is decorated in an attractive fashion .81 (.34) .34 9.48 .66
DE4 The store understands that the design of its facility is .77 (.41) .41 8.71 .59
important to me.
DE5 The interior design is visually appealing .91 (.17) .17 11.32 .83
CL2 This store is the first choice for me among the same types of .80 (.36) .36 8.87 .64
stores
CL3 If there are two stores close to each other and both of them .86 (.26) .26 9.80 .74
CL4 I will visit this store even if others are cheaper .77 (.41) .41 8.39 .59
1.24 Table 24 DE and CLB

Loadings Variance
important to me.
438
1.25 Table 25 DE, EM and ELI*
Loadings Variance
important to me.
Chi-Square 27.04, df 24, P-value 0.30251, RMSEA 0.036, SRMR.047, GFI .94, NFI .95, CFI .99, * ELI was
analysed as it was problematic with the customer factor.
1.26 Table 26 DE and EDE

Loadings Variance
important to me.
EDE1 The materials used inside the store are pleasing & of high .59 .65 9.84 .35
quality
important to me.
1.27 Table 27 DE and ELI- See Table 25
1.28 Table 28 DE and ELAY

Loadings Variance
C3 The use of colour in the decor scheme adds excitement to.78 .40 8.83 .60
important to me.
looking for
439
1.29 Table 29 DE and EO
Loadings Variance
C3 The use of colour in the decor scheme adds excitement .78 .40 8.83 .60
important to me.
1.30 Table 30 DE and ES

Loadings Variance
important to me.
ES1 Generally Speaking, I am very satisfied with this job .85 .27 10.31 .73
ES3 I like my job .90 .19 11.27 .81
ES4 There are no fundamental things I dislike about my Job .81 .34 9.56 .66
ES5 I like my job more than many employees of other companies .71 .49 7.89 .51
ES6 I consider this employee as first choice .80 .36 9.36 .64
ES7 I am generally satisfied with the kind of work I do in this job .90 .19 11.25 .81
1.31 Table 31 DE and EL

Loadings Variance
important to me.
Chi-Square 39.62, df 33, P-value 0.19838, RMSEA 0.046, SRMR.057, GFI .92, NFI .95, CFI .99, * Error
covariance set for EL1 and EL5, 1.78
440
1.32 Table 32 L and LAY
Loadings Variance
looking for
1.33 Table 33 L and O

Loadings Variance
1.34 Table 34- L and QD

Loadings Variance
1.35 Table 35- L and QE

Loadings Variance
441
1.36 Table 36- L and CS
Loadings Variance
L2 The lighting creates a comfortable atmosphere .95 (.09) .09 6.22 .91
L3 The lighting is excellent at the store. .76 (.43) .43 5.54 .57
CS3 Providing an accurate service for me .87 (.25) .25 10.55 .75
CS4 Willingness to help me .93 (.13) .13 11.94 .87
CS5 Making me feel secure about my transactions. .89 (.21) .21 10.95 .79
CS6 Showing sincere interest in me .83 (.31) .31 9.88 .69
1.37 Table 37-L and CLA

Loadings Variance
CL2 This store is the first choice for me among the same types .83 .32 9.26 .68
of stores
have similar products and prices, I will choose to shop
here
1.38 Table 38-L and CLB

Loadings Variance
L2 The lighting creates a comfortable atmosphere .90 08 9.76 .82
CL5* Say positive things about the store to other people .88 .22 10.99 .78
CL6* Do more business with the store in the next few months .87 .25 10.70 .75
Chi-Square 19.36, df 12, P-value 0.08018, RMSEA 0.080
SRMR.049, GFI .95, NFI .98, CFI .99, *Error covariance set for CL5 and CL6, 3.99
1.39 Table 39 L, EM and ELI*

Loadings Variance
Chi-Square 5.64, df 6, P-value 0.46524, RMSEA 0.000, SRMR.036, GFI .98, NFI .97, CFI 1.00, * similarly
to ELI , L appeared problematic when examined with employee factors, as such EM was also analysed
442
1.40 Table 40 L and EDE*
Loadings Variance
EDE1 The materials used inside the store are pleasing & of high.59 .65 6.14 .35
quality
important to me.
Chi-Square 39.78, df 32, P-value 0.16233, RMSEA 0.050, SRMR.055, GFI .92, NFI .94, NNFI .98, CFI .99,
* similarly to ELI , L appeared problematic when examined with employee factors, as such EM was also
analysed
1.41 L and ELI –See Table 39
1.42 Table 42 L and ELAY *

Loadings Variance
ELAY2 In this store, the aisles between the shelves are wide
.65 .57 6.63 .43
ELAY3 It is easy to walk around this store and find what you .82 .32 8.75 .68
are looking for
Chi-Square 18.98, df 11, P-value 0.06142, RMSEA 0.087, SRMR.059, GFI .99, NFI .91, CFI .95, *
similarly to ELI, L appeared problematic when examined with employee factors, as such EM was also
analysed
1.43 Table 43 L and EO *

Loadings Variance
Chi-Square 23.29, df 24, P-value 0.50301, RMSEA 0.000, SRMR.050, GFI .95, NFI .94, CFI 1.00, *
similarly to ELI, L appeared problematic when examined with employee factors, as such M was also
analysed
443
1.44 Table 44 L and ES
Loadings Variance
ES3 I like my job .90 .19 11.26 .81
ES5 I like my job more than many employees of other .71 .49 7.88 .51
companies
ES7 I am generally satisfied with the kind of work I do in this .90 .19 11.26 .81
job
Chi-Square 44.82, df 41, P-value 0.31475, RMSEA 0.031, SRMR.045, GFI .92, NFI .95, CFI 1.00, *
similarly to ELI, L appeared problematic when examined with employee factors, as such M was also
analysed
1.45 Table 45-L and EL

Loadings Variance
L2 The lighting creates a comfortable atmosphere .85 .28 3.94
L3 The lighting is excellent at the store. .85 .28 3.94
EL1* Most of the time I am willing to put in extra effort so that
.84 .29 9.74
the store remains a leading store.
EL2 I speak highly of the shop in which I work to my friends .78 .40 8.78
EL3 I feel proud to work at this store .90 .19 10.91
EL4 I would turn down a job with comparable pay and career .57 .68 5.82
EL5* I care about the fate of the shop in which I work .85 .28 9.84
Chi-Square 9.49, df 12, P-value 0.66054, RMSEA 0.000, SRMR.042, GFI .97, NFI .98, CFI 1.00, * Error
1.46 Table 46 LAY and O

Loadings Variance
LAY3 It is easy to walk around this store and find what you .78 .40 8.33 .60
are looking for
Chi-Square13.60, df 8, P-value 0.09277, RMSEA 0.085, SRMR.040, GFI .95, NFI .96, CFI .98
444
1.47 Table 47 LAY and QD
Loadings Variance
looking for
1.48 Table 48 LAY and QE

Loadings Variance
looking for
1.49 Table 49 LAY and CS

Loadings Variance
looking for
LAY4 The stores layout allows me to move around easily .91 .18 8.77 .82
445
1.50 Table 50- LAY and CLA
Loadings Variance
looking for
CL2 This store is the first choice for me among the same types of .81 .34 8.99 .66
stores
1.51 Table 51- LAY and CLB

Loadings Variance
looking for
covariance set for CL5 and CL6, 4.05
1.52 Table 52 LAY, EM and ELI*

Loadings Variance
looking for
Chi-Square 10.17, df 11, P-value 0.51514, RMSEA 0.000, SRMR.043, GFI .97, NFI .96, CFI 1.00 *as
before with ELI it appears problematic when analysed with Customer factors, as such was also analysed with
EM
446
1.53 Table 53 LAY and EDE
Loadings Variance
looking for
quality
important to me.
1.54 Table 54 LAY and ELI –See Table 52
1.55 Table 55 LAY and ELAY

Loadings Variance
looking for
looking for
1.56 Table 56 LAY and EO

Loadings Variance
LAY2 In this store, the aisles between the shelves are wide
.53 .72 5.03 .28
LAY3 It is easy to walk around this store and find what you .76 .42 7.15 .58
are looking for
447
1.57 Table 57 LAY and ES
Loadings Variance
looking for
ES3 I like my job .90 .19 11.29 .81
companies
job
1.58 Table 58 LAY and ELI

Loadings Variance
looking for
EL1* Most of the time I am willing to put in extra effort so that .84 .29 9.73 .71
1.59 Table 59 O and QD

Loadings Variance
448
1.60 Table 60 O and QE
Loadings Variance
1.61 Table 61 O and CS

Loadings Variance
1.62 Table 62 O and CLA

Loadings Variance
CL2 This store is the first choice for me among the same .82 .32 9.17 .68
types of stores
CL3 If there are two stores close to each other and both of .84 .30 9.34 .70
them have similar products and prices, I will choose to
shop here
449
1.63 Table 63 O and CLB
Loadings Variance
CL9 Recommend the store to someone who seeks your .76 .42 8.74 .58
advice
Chi-Square 19.43, df 18, P-value 0.36584, RMSEA 0.029, SRMR.058, GFI .95, NFI .98, CFI 1,* error
covariance set for CLA5 and CLA6, 4.05
1.64 Table 64 O, EM and ELI*

Loadings Variance
EM2 The music in the store is played at an appropriate .64 .59 5.53 .42
volume.
Chi-Square 16.96, df 11, P-value 0.10907, RMSEA 0.075, SRMR.054, GFI .95, NFI .94, CFI .98, * as noted
ELI has appeared problematic throughout the analyses and was examined with EM
1.65 Table 65 O and EDE

Loadings Variance
EDE1 The materials used inside the store are pleasing & of .59 .65 6.14 .35
high quality
important to me.
Chi-Square 31.89, df 26, P-value 0.19669, RMSEA 0.049,SRMR.061, GFI .93, NFI .94, CFI .98
1.66 Table 66 O and ELI –See Table 64
450
1.67 Table 67 O and ELAY
Loadings Variance
looking for
1.68 Table 68 - O and EO

Loadings Variance
1.69 Table 69 O and ES

Loadings Variance
ES3 I like my job .90 .19 11.25 .81
companies
ES7 I am generally satisfied with the kind of work I do in .90 .19 11.27 .81
this job
451
1.70 Table 70 O and EL
Loadings Variance
EL1* Most of the time I am willing to put in extra effort so .84 .29 9.72 .71
that the store remains a leading store.
EL2 I speak highly of the shop in which I work to my .78 .40 8.75 .60
friends
EL4 I would turn down a job with comparable pay and .57 .67 5.85 .33
1.71 Table 71 QD and QE

Loadings Variance
1.72 Table 72 QD and CS

Loadings Variance
452
1.73 Table 73 QD and CLA
Loadings Variance
types of stores
shop here
1.74 Table 74 QD and CLB

Loadings Variance
advice
Chi-Square 52.69, df 25, P-value 0.00098, RMSEA 0.107, SRMR.092, GFI .89, NFI .94, CFI .97, * error
1.75 Table 75 QD, EM and ELI*

Loadings Variance
volume.
Chi-Square 19.24, df 17, P-value 0.31476, RMSEA 0.037, SRMR.052, GFI .95, NFI .95, CFI .99, * as noted
ELI has appeared problematic throughout the analyses and was examined with EM
453
1.76 Table 76 QD and EDE
Loadings Variance
QD1 The arrangement of this stores interior layout is better.
.85 .28 10.22 .72
QD3 The design of this store's checkout facilities is better
.76 .43 8.22 .57
high quality
important to me.
1.77 Table 77 QD and ELI –See Table 75
1.78 Table 78 QD and ELAY

Loadings Variance
QD1 The arrangement of this stores interior layout is better.
.85 .28 10.22 .72
QD3 The design of this store's checkout facilities is better
.75 .43 8.22 .57
looking for
1.79 Table 79 QD and EO

Loadings Variance
454
1.80 Table 80 QD and ES
Loadings Variance
ES3 I like my job .90 .19 11.25 .81
companies
this job
1.81 Table 81 QD and EL

Loadings Variance
friends
1.82 Table 82 QE and CS

Loadings Variance
455
1.83 Table 83 QE and CLA
Loadings Variance
.83 .31 9.41 .69
stores
1.84 Table 84 QE and CLB

Loadings Variance
1.85 Table 85 QE, EM and ELI*

Loadings Variance
Chi-Square 23.44, df 24, P-value 0.49404, RMSEA 0.000, SRMR.030, GFI .95, NFI .97, CFI 1, * ELI was
analysed with the Factors as well, as ELI was problematic with the customer factor.
456
1.86 Table 86 QE and EDE
Loadings Variance
EDE1 The materials used inside the store are pleasing & of high
.59 .65 6.11 .35
quality
important to me.
1.87 Table 87 QE and ELI- See Table 85
1.88 Table 88 QE and ELAY

Loadings Variance
looking for
Chi-Square 17.56, df 19, P-value 0.55217, RMSEA 0.000, SRMR .046, GFI .96, NFI .97, CFI 1
1.89 Table 89 QE and EO

Loadings Variance
Chi-Square 24.21, df 26, P-value 0.56374, RMSEA 0.000, SRMR .046, GFI .95, NFI .96, CFI 1
457
1.90 Table 90 QE and ES
Loadings Variance
ES3 I like my job .90 .19 11.26 .81
ES5 I like my job more than many employees of other companies .71 .49 7.89 .51
ES7 I am generally satisfied with the kind of work I do in this job .90 .19 11.25 .81
1.91 Table 91 QE and EL

Loadings Variance
1.92 Table 92 CS and CLA

Loading Variance
stores
Chi-Square 14.01, df 13, P-value 0.37341, RMSEA 0.028, SRMR .035, GFI .96, NFI .97, CFI 1.00
458
1.93 Table 93 CS and CLB
Loading Variance
1.94 Table 94 CS and EM

Loadings Variance
1.95 Table 95 CS and EDE

Loadings Variance
.59 .65 6.11 .35
quality
important to me.
1.96 Table 96 CS and ELI

Loadings Variance
459
1.97 Table 97 CS and ELAY
Loadings Variance
looking for
Chi-Square 18.12, df 13, P-value 0.15291, RMSEA 0.064, SRMR.048, GFI .95, NFI .96, , CFI .99
1.98 Table 98 CS and EO

Loadings Variance
1.99 Table 99 CS and ES

Loadings Variance
ES3 I like my job .90 .18 11.31 .82
companies
job
460
1.100 Table 100 CS and EL

Loadings Variance
.84 .30 9.65 .70
EL3 I feel proud to work at this store .91 18 11.01 .82
1.101 Table 101 CLA and CLB

Loadings Variance
.82 .33 9.42 .67
stores
1.102 Table 102 CLA , EM and ELI*

Loadings Variance
.82 .33 8.95 .67
stores
Chi-Square 4.94, df 11, P-value 0.93417, RMSEA 0.000, SRMR.029, GFI .99, NFI .98, CFI 1.00, * As
noted ELI has been problematic and was analysed with EM
461
1.103 Table 103 CLA and EDE
Loadings Variance
CL2 This store is the first choice for me among the same types
.82 .32 9.05 .68
of stores
have similar products and prices, I will choose to shop
here
quality
important to me.
1.104 Table 104 CLA and ELI- See Table 102
1.105 Table 105 CLA and ELAY

Loadings Variance
types of stores
shop here
looking for
1.106 Table 106 CLA and EO

Loadings Variance
CL2 This store is the first choice for me among the same.82 .33 8.97 .67
types of stores
them have similar products and prices, I will choose
to shop here
462
1.107 Table 107 CLA and ES
Loadings (error Variance
)
stores
ES3 I like my job .90 .17 11.25 .81
companies
job
1.108 Table 108 CLA and EL

Loadings Variance
stores
1.109 Table 109 CLB , EM and ELI**

Loadings Variance
covariance set for CL5 and CL6, 4.09, ** As noted ELI has been problematic and was analysed with other
factors
463
1.110 Table 110 CLB and EDE
Loadings Variance
.59 .65 6.11 .35
quality
important to me.
1.111 Table 111 CLB and ELI- See Table 109
1.112 Table 112 CLB and ELAY

Loadings (error) Variance
CL6* Do more business with the store in the next few months.86 .25 10.62 .75
ELAY2 In this store, the aisles between the shelves are wide.62 .61 6.25 .39
looking for
1.113 Table 113 CLB and EO

Loadings Variance
CL5* Say positive things about the store to other people
.88 .23 10.93 .77
CL6* Do more business with the store in the next few .86 .25 10.62 .75
months
advice
464
1.114 Table 114 CLB and ES
Loadings Variance
ES3 I like my job .90 .17 11.26 .81
companies
job
1.115 Table 115 CLB and EL

Loadings Variance
EL1** Most of the time I am willing to put in extra effort so that
.84 .30 9.70 .70
EL5** I care about the fate of the shop in which I work .84 .28 9.84 .72
Chi-Square 24.04, df 32, P-value 0.84312, RMSEA 0.000, SRMR.035, GFI .95, NFI .98, CFI 1.00, * error
covariance set for CL5 and CL6, 4.09, ** Error covariance set for EL1 and EL5, 1.86
1.116 Table 116 EM and EDE

Loadings Variance
EM2 The music in the store is played at an appropriate volume.
.71 .50 6.22 .50
.59 .65 6.15 .35
quality
important to me.
465
1.117 Table 117 EM and ELI
Loadings Variance
Chi-Square .50, df 1, P-value 0.48068, RMSEA 0.000, SRMR.0078, GFI 1, NFI 1, CFI 1
1.118 Table 118 EM and ELAY

Loadings Variance
volume.
looking for
Chi-Square 9.53, df 4, P-value 0.04909, RMSEA 0.120, SRMR .055, GFI .96, NFI .94, CFI .96
1.119 Table 119 EM and EO

Loadings Variance
volume.
1.120 Table 120 EM and ES

Loadings Variance
ES3 I like my job .90 .19 11.22 .81
companies
job
466
1.121 Table 121 EM and EL
Loadings Variance
EM2 The music in the store is played at an appropriate volume.
.74 .46 6.17 .54
.83 .32 9.54 .68
Chi-Square 22.59, df 23, P-value 0.48466, RMSEA 0.000, SRMR.057, GFI .95, NFI .97, CFI 1.00,* Error
1.122 Table 122 EDE and ELI

Loadings Variance
.59 .65 6.19 .35
quality
important to me.
1.123 Table 123 EDE and ELAY

Loadings Variance
high quality
important to me.
looking for
467
1.124 Table 124 EDE and EO
Loadings Variance
high quality
important to me.
1.125 Table 125 EDE and ES

Loadings Variance
EDE1 The materials used inside the store are pleasing & of high .60 (.63) .63 6.29 .37
quality
important to me.
ES3 I like my job .90 .19 11.19 .81
companies
job
468
1.126 Table 126 EDE and EL
Loadings Variance
.60 .64 6.20 .36
quality
important to me.
Chi-Square 51.59, df 42, P-value 0.14746, RMSEA 0.049, SRMR .057, GFI .91, NFI .95, CFI .99, * Error
1.127 Table 127 ELI and ELAY

Loadings Variance
looking for
1.128 Table 128 ELI and EO

Loadings Variance
ELI2 The lighting creates a comfortable working .89 .20 10.52 .80
atmosphere
469
1.129 Table 129 ELI and ES
Loadings Variance
ES3 I like my job .90 .19 11.23 .81
companies
job
1.130 Table 130 ELI and EL

Loadings Variance
.83 .31 9.60 .69
Chi-Square 57.90, df 12, P-value 0.79286, RMSEA 0.049, SRMR.040, GFI .98, NFI .99, CFI 1.00,* Error
1.131 Table 131 ELAY and EO

Loadings Variance
ELAY2 In this store, the aisles between the shelves are wide.66 .56 6.85 .44
ELAY3 It is easy to walk around this store and find what you .81 .35 8.84 .65
are looking for
470
1.132 Table 132 ELAY and ES
Loadings Variance
looking for
ES3 I like my job .90 .19 11.21 .81
companies
job
Chi-Square 21.41, df 26, P-value 0.72052, RMSEA 0.000,SRMR .040, GFI .95, NFI .98, CFI 1.00
1.133 Table 133 ELAY and EL

Loadings Variance
looking for
1.134 Table EO and ES

Loadings Variance
ES3 I like my job .90 .19 11.23 .81
companies
this job
Chi-Square 48.54, df 93, P-value 0.05062, RMSEA 0.067, SRMR.058, GFI .91, NFI .96, CFI .99,
471
1.135 Table EO and EL
Loadings Variance
friends
1.136 Table ES and EL

Loadings Variance
ES3 I like my job .91 .18 11.41 .82
ES4 There are no fundamental things I dislike about my .82 .34 9.61 .66
Job
companies
this job
friends
472

Incorporating Environmental Stimuli Into The Service Profit Chain

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Incorporating Environmental Stimuli into the Service Profit Chain

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A thesis submitted in fulfilment of the requirements for the award of Doctor of

In examining employee and customer responses in a grocery retail environment, several

Several theoretical contributions are highlighted; firstly that employee environmental

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Materials Published from this work.

Kearney T, Coughlan J. and Kennedy, A. (2007), Servicescapes: A Review of

Kearney T., Coughlan J. and Kennedy, A (2007), A Review of the Servicescape

Kearney T, Coughlan J. and Kennedy, A. (2011), Incorporating the Servicescape and

Kearney T, Coughlan J. and Kennedy, A. (2011), Incorporating the Environmental

Kearney T, Coughlan J. and Kennedy, A. (2013), An Exploration of the Effects of the

Le chríochnú, ba mhaith liom, go háirithe buíochas a ghabháil do m’athar don tacaíocht

Acknowledgements .......................................................................................................... iii

Table of Contents .............................................................................................................. v

List of Figures ................................................................................................................. xii

List of Tables.................................................................................................................. xiii

Research Objectives ........................................................................................................ 19

Layout of the Thesis ........................................................................................................ 22

1. CHAPTER 1 The Service Profit Chain (SPC) ........................................................ 26

1.1 Introduction ...................................................................................................... 27

1.2 The SPC ............................................................................................................ 27

1.3 SPC links .......................................................................................................... 33

1.3.1 The Financial Performance and Customer/Employee Loyalty Links ....... 35

1.3.2 The Customer Loyalty and Employee Loyalty Links ............................... 36

1.3.3 The Customer Satisfaction and Employee Satisfaction Links .................. 38

1.3.4 Global Service Evaluations ....................................................................... 40

1.3.5 Service Quality .......................................................................................... 41

1.3.6 Customer Satisfaction ............................................................................... 45

1.3.7 Employee Satisfaction ............................................................................... 51

1.3.8 Employee Loyalty ..................................................................................... 54

1.3.9 Customer Loyalty ...................................................................................... 58

1.4 Conclusion ........................................................................................................ 61

2.1 Introduction ...................................................................................................... 63

2.2 Environmental Psychology............................................................................... 64

2.3 The Mehrabian and Russell Framework .......................................................... 66

2.4 The S-O-R Paradigm ........................................................................................ 68

2.4.1 The (S) Component ................................................................................... 69

2.4.2 The (O) Component .................................................................................. 71

2.4.3 The (R) Component................................................................................... 77

2.5 The Role of Dominance ................................................................................... 80

2.6 A Critique of the Hypotheses ........................................................................... 83

2.7 Target-Arousal .................................................................................................. 90

2.8 Lazarus (1991) Cognition Theory of Emotion Model ...................................... 92

2.9 Conclusion ........................................................................................................ 94

3 CHAPTER 3 Servicescape ...................................................................................... 97

3.1 Introduction ...................................................................................................... 98

3.2 Bitner’s (1992) Servicescape ............................................................................ 98

3.3 Servicescape Elements ................................................................................... 107

3.3.1 Music ....................................................................................................... 108

3.3.1.1 Tempo .................................................................................................. 115

3.3.3 Lighting ................................................................................................... 131

3.3.4 Olfaction .................................................................................................. 134

3.3.4.1 Olfaction Models ................................................................................. 137

3.5 Conclusion ...................................................................................................... 164

4 CHAPTER 4 Work Climate .................................................................................. 166

4.1 Introduction .................................................................................................... 167

4.2 Internal Marketing (IM) ................................................................................. 168

4.3 Work Climates ................................................................................................ 172

4.3.1 Global Verses Facet-Specific Climates ................................................... 180

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